ABSTRACT
This chapter compares the employee share of national income with the profit share. It explains why income distribution is so important for understanding the movements of the macro-economy. The chapter explains how income distribution has changed in the United States in the long run, as well as the reasons for these changes. It also explains how income distribution changes over the business cycle, as well as the reasons for those changes; and how changes in income distribution result in different macroeconomic impacts. The chapter highlights the trajectory of inequality in the United States. It shows the long-run trends in the degree of inequality between employees and owning capitalists as well as how the inequality fluctuates over the course of the ten business cycles since World War II. The significance of inequality for the macroeconomy is one of the important aspects of the work of the economist Karl Marx.
