ABSTRACT
Solving a problem requires an accurate diagnosis of its cause, and much of the received wisdom on the causes of rising inequality is spurious. Perhaps the most commonly held view is that inequality has grown because corporate miscreants have successfully suppressed competition. Real median household incomes have grown by roughly 15 percent since then, primarily because of large increases in female labor force participation. Only those in the top quintile, whose incomes have roughly doubled since the mid-1970s, have escaped the income slowdown. Real incomes among the top 5 percent, for example, were more than two and a half times larger in 2007 than in 1979, whereas those among the top 1 percent were almost four times larger. In 1976 only 8.9 percent of the nation's total pretax incomes went to the top 1 percent of earners, but by 2007 that group was receiving 23.5 percent of the total.
