chapter  5
Suggested Causes of Growing Inequality
Pages 22

Economists' explanations for growing inequality over the last fifteen years or so have focused on economic and social changes that have affected the demand for and supply of labor, as well as changes in certain wage-setting mechanisms in the labor market. This framework has been particularly useful for understanding growing dispersion in the earnings distribution, but less so for understanding the growth in income differences among families and households. The decision-making process within the household, which involves many other domains besides the labor market, is very complex and involves an assortment of none co nomic factors.