The relative distribution of family income has changed very little in the past generation. The nation took one big step toward equality during World War II; throughout the postwar period, the top income groups have received a substantially smaller share of total income than they had in the prosperous years of the twenties.

This was the historical period that economists Claudia Goldin and Robert A. Margo would describe, a decade and a half later, as the Great Compression. For half a century U.S. income distribution either grew more equal or remained stable. What Okun couldn’t know was that this epoch was nearing its end. Starting around 1979, the Great Compression gave way to a period of steadily worsening income inequality that Paul Krugman named the Great Divergence (a phrase I borrowed for the title of a 2012 book I wrote on the subject). That’s the epoch we inhabit today, and it’s lasted almost as long as the Great…

Read more…

Share.

Comments are closed.