Miles Corak — Income Inequality, Equality of Opportunity, and Intergenerational Mobility

The summer issue of the Journal of Economic Perspectives will feature a collection of articles on inequality and the top 1%, some of which are now being circulated by the authors.

The paper by Tony Atkinson and his coauthors, “The top 1 percent in international and historical perspective,” is available in this post, and Greg Mankiw has posted a copy of his paper, “Defending the One Percent“, on his blog.

My contribution to the collection is based on the notion that the inequality literature has paid little attention to the intergenerational consequences of increasing top income shares, and it can be read as a counterpoint to Mankiw’s piece, or at least to his claim that inequality of opportunity is not a reason to worry about the top 1%.

Here is the close to final draft: Income Inequality, Equality of Opportunity, and Intergenerational Mobility. But if you just want a quick read, an excerpt from the conclusion follows. Either way, feedback is—as always—welcomed.

Economics for Public Policy
Income Inequality, Equality of Opportunity, and Intergenerational Mobility
Miles Corak | Professor of Public and International Affairs, University of Ottawa
(h/t Paul Krugman at The Conscience of a Liberal)

“Laws and government may be considered in every case as a combination of the rich to oppress the poor and preserve for themselves the inequality of the goods which would otherwise be soon destroyed by the attacks of the poor, who if not hindered by the government would soon reduce the others to an equality with themselves by open violence”
—Adam Smith, Lectures On Jurisprudence, 1762-3; iv, 21-2, p. 208

This is what democracy is supposed to correct according to the myth. However, reading the Founding Fathers leads to the opposite viewpoint, which is why the US and other "liberal democracies" are actually republics. The result for the most part has been continuation of inequality due to the power and class structure. While some conventional economists are finally willing to talk about inequality, almost none of them are willing yet to talk about power.