72

There could be several reasons here are just few: Principal-agent problems. Firms are typically not managed by their owners but by managers (agents) who act on the behalf of owners/shareholders (principals). While, owners might desire to maximize profits agents can to some degree act to pursue their own goals (see discussion in Hendrikse Economics and ...


35

In short because economy is not a zero-sum game and because economic production does not need to decline but can grow over time. First of all, forget about money. Money in economics is just extra tool that solves issue of double coincidence of wants, allows you to store value over time and to do accounting. In fact, traditionally money consisted of ...


35

Quite simple. If women are paid less, then that's because people believe their work to be worth less. The same believe, that womens work is worth less, then stops employers from hiring more women. (Please note that I don't endorse this view. It is, however, the most simple explanation inside of the assumptions made by the question. Also, as a plus, this ...


30

I should say pre-emptively that I'm not satisfied with ideas that merely may explain the effect, as yesterday's question produced a proliferation of rationalisations and claims that lacked rigour. I'd prefer to see an explanation that attempts to be comprehensive, or supports contentious claims (such as those about women's productivity) with research. Your ...


26

Because women are not paid less for the same work when all the variables are taken into equasion. Caveat: below answer is a nearly verbatim copy of my earlier answer on Politics.SE on the topic In short, the much-cited "77 cents" figure is from the "lies, big lies, and statistics" department of political propaganda. The real unexplained ...


22

The metric of median household income is also used by others to argue the presence of income inequality: https://en.wikipedia.org/wiki/Income_inequality_in_the_United_States#Causes However, it seems that it is not only the median but also the mean that stagnates: (I used family instead of household income because I could not find a time series for mean ...


18

I've not see a strict analysis of the top one percent but I have seen an analysis of the top 400 tax payers, the very highest income taxpayers: Who are the rich? It depends who you ask and when. Since 1992, the IRS has tracked the top 400 earners in terms of adjusted gross income—the so called fortunate 400. ... Most importantly, this IRS report ...


18

I'm hesitant whether to write this as an answer or as a comment for why this question should be closed as off-topic, since the reasons likely have little to do with economics. Since you did specifically ask about economic reasons, though, I'll attempt an answer. The economic part of your question is: What are the economic reasons why, when encountering low ...


17

To answer the question: Yes, the 1% is relatively stable. From The Economist: Membership in America's 1% is relatively stable; three-quarters of the households in the percentile one year will still be there the next. Also your "belief" that the vast majority of the income that the 1% receive is variable, from borrowing, etc, isn't actually true. The ...


16

The short answer is No. Every single year, except 2009, for the past 55 years of continuously recorded economic history, the world has been getting richer. The -2.1% global recession in 2009 was made up in 2010 with 4.1% growth. I was just working with the World Bank's World Development Indicators, which track global GDP growth, and I double checked. We ...


12

I must preface that the original question as it stands is way too broad. It probably needs to be cut down into smaller parts, but that's hard to know how to do if you are a layperson. This question really is an enormous one, and although there are a lot of answers that give bits and pieces of info, because the question is so broad, there are going to be lots ...


10

This is an interesting question, and I don't have a good answer. Just pointing out about the second part that the canonical labour market model of Diamond-Mortensen-Pissarides views a labour market contract in terms of matching, when a surplus is shared between employer and employee through a nash bargaining mechanism. So, earning less does not necessarily ...


9

The reason you bring forward belongs to technological directed change, which is regarded one of the main explanations for wage growth differentials. Keep in mind it's not exactly the way you're phrasing it: The growth in tech companies rewards people who are skilled well for their kind of jobs (as opposed to "wealthy people"). Card and DiNardo have a nice ...


9

There is a serious flaw in your reasoning. You seem to think that at each production step, some of the money goes to people (labour) and the rest is burnt in a fire. This is not true. All of the money goes to people. When you pay Z for a product, all of Z goes to workers, owners, investors, rentiers, etc. None is destroyed.


8

There have been several good answers that tackle the economic reasons already; but let me take a different approach. More or less the same approach of INNONOTING, but he got downvoted probably because he didn't really back up his claims. It is often said that occupations have a gender bias because men and women are raised to fit a certain role-pattern and ...


7

I think this gives an answer reasonably close to what you're looking for (from the NYTimes article, "In climbing the income ladder, location matters," featuring research by Raj Chetty, Emmanuel Saez, and others). The team of researchers initially analyzed an enormous database of earnings records to study tax policy, hypothesizing that different ...


7

All of these answers are true but don't provide an easy solution which doesn't use excel/code. Gini can be fairly easily computed by hand too. The Gini coefficient fundamentally shows the shaded region above the lorenz curve in order to get a relative gauge of the distance the lorenz curve is from the line of equality. Fundamentally what this shows is the ...


7

Just adding to the great answer by 1muflon1. There is a fallacy in your argument: some money goes to pay for goods, but in capitalism there are property rights, so those goods (like land or the product of land) are owned by someone that gets an income from the money spent in them. There is no leakage of money.


7

This is a very good question and I agree with the answer about the 'wage gap'. Education is a point that I want to add here. A survey was recently conducted in the construction labour market in China. Women have relatively low hourly salary than men. We may think this's because women are not able to carry heavy materials. On the contrary, the majority of the ...


7

It has been shown numerous times that the apparent pay gap is largely due to women having to work part time or take time off for maternity leave, and that the gap is correspondingly in a narrow age range (I believe mid 20's +/- a few years). However, the statistic is often spun by computing hourly rates and averaging everybody together, and "women make ...


7

Slate Star Codex has a long, well researched article. TL DR: It is very likely that women as a group have more members who care about persons / living things and men as a group have more members who prefer things / concepts. There is a strong correlation between prenatal testosterone and interested in things. Women with a high prenatal testosterone ...


6

Here is a fairly instructive figure showing a cross-country measure of income inequality: It shows that inequality was increasing for most of the last 35 years, but has started to decrease again recently. (You can read more at the source for this figure: http://www.conferenceboard.ca/hcp/hot-topics/worldinequality.aspx) Once data is weighted by population, ...


6

Three points - one which has already been raised much better by denesp: Are household sizes the same (we see the answer as no)? How about amount of earners per household? What about the amount of goods and services that these household incomes can buy? Should wages be increasing if a dollar can get more goods and services, thanks to technology? Many ...


6

I suppose that it depends on the time scale you are considering. Over the very long run the poor seem to have benefited far more than the rich from growth. See for example Robert J. Samuelson in the Washington Post: By 1915, the United States was the world’s richest nation — and yet, most Americans were dirt poor by today’s standards. Adjusted for ...


6

Wealth cap that would confiscate and redistribute wealth above certain limit is in an essence just different term for wealth tax (as opposed to situations where there would be just a ban on having more wealth which would be proper cap). Consequently, to see whether such policy is optimal one has to look in literature on wealth taxes. A wealth cap that takes ...


5

The recent development of many "developing countries" and "emerging markets" does not mean that Western colonial powers did not exploit them in the past. Emerging economies owe their modern GDP growth to cheap labor, as (former) Western colonial powers switched their (expensive) manufacturing bases to countries like China, India, etc. In the past, they were ...


5

Let me preface this answer with a word of caution: your question is a very good and important one but it is also one that depends tremendously on the definitions of the terms it uses. I'm going to attempt to answer it in the most unassuming and non-technical way. You could pose it in technical terms and get a more precise answer. The wealth of the rich can ...


5

They measure different things. In particular the Gini index measures inequality and is strongly affected by the number of individuals with almost nothing, while the Herfindahl index measures the diversity of the shares (for example the choice in a market) and is almost unaffected by those with almost no share If $n$ people had equal shares then the Gini ...


4

Maybe check Clark's work. He allegedly uses long time series. http://jasoncollins.org/2014/09/30/the-genetic-basis-of-social-mobility/


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