The voices of Urban Institute's researchers and staff
January 15, 2014

Income inequality: Evidence and policies from the Urban Institute

January 15, 2014

The Joint Economic Committee of the Senate will hold a hearing tomorrow on income inequality in the United States, a recently popular topic. While income inequality has trended upward for decades, it’s more complicated to say precisely for whom inequality has grown, during what time periods, or the extent to which that’s good or bad.

inequality

These are complicated questions, and Urban Institute researchers study inequality—of income and other types—from many vantage points. You can browse their work, including a brief overview and sections on economic mobility, economic insecurity, and poverty and the safety net.

Several of our authors have also weighed in recently on specific topics.

Income inequality and economic growth

Does higher income inequality lead to lower economic growth? It’s a tough question to answer, but comparing US metros provides some evidence in support of that idea. Perhaps more salient, metros with lower median incomes and higher inequality tend to differ from richer and more equal metros: they are less educated, have lower unionization rates, and smaller concentrations of professional “white collar” work.

How pronounced is actual income inequality?

Comparing income differences across US metros is not as simple as it might seem. Some cities are infamous for their expensive housing, while others are much more affordable. Some evidence suggests that inequality measured by standard of living (i.e., what your income can actually buy) is not as pronounced as nominal income inequality.

Don’t forget about wealth inequality

Substantial gaps have grown not only in income but in wealth as well. Research documents a large generational deficit: today’s young people have accumulated 7 percent less wealth on average than their parents’ generation had by the same stage in life. The wealth gap between whites and minorities is also quite pronounced. Our researchers testified recently on ways to reduce that gap.

What can we do about inequality?

Our researchers argued recently for policy responses that achieve a dual mandate: lowering income inequality while increasing economic mobility. Examples of such policies include providing high-quality childcare, early childhood education programs, and a range of options for improving secondary and postsecondary education outcomes. These policies can improve the wellbeing of parents and children in the short-term, while setting kids up for more success later in life.

Follow Zach McDade on Twitter at @zmcdade

 

Photo by Peter Dejong/AP

SHARE THIS PAGE

As an organization, the Urban Institute does not take positions on issues. Experts are independent and empowered to share their evidence-based views and recommendations shaped by research.