It seems, according to Tyler Cowen’s brief look at a paper by Robert J. Gordon, that inequality in income may in fact not be on the rise and may not be the problem it is commonly made out to be in political circles.
The rise in American inequality has been exaggerated both in magnitude and timing. Commentators lament the large gap between the growth rates of real median household income and of private sector productivity. This paper shows that a conceptually consistent measure of this growth gap over 1979 to 2007 is only one-tenth of the conventional measure. Further, the timing of the rise of inequality is often misunderstood. By some measures inequality stopped growing after 2000 and by others inequality has not grown since 1993.
The paper comes to some interesting conclusions.