Tuesday, October 24, 2017

The 0.01% and the 0.1%

Income inequality in the US between 2000 and 2012 has been worsened particularly by the rising resources accrued by the top 0.01% of earners, a group of 12,000 households making over $7.2 million a year, a research paper published by the Federal Reserve Bank of Minneapolis finds.

In Top Income Inequality in the 21st Century: Some Cautionary NotesFatih Guvenen and Greg Kaplan find that the “increase in top shares is primarily due to an increase in average incomes at the very top.


Ray Dalio, the founder of Bridgewater Associates, shared a chart in a LinkedIn post showing the share of US household wealth by income level: The top 0.1% of households now hold about the same amount of wealth as the bottom 90%, which he notes is similar to the wealth gap that occurred from 1935 to 1940.

The US GDP per capita is on par with developed European countries like Switzerland and Norway, but its Gini coefficient is in the same tier as Russia's and China's.


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