Please join us for a colloquium being given by Robert Manduca from Harvard University.
Income Inequality and Economic Exclusion
Income inequality has risen dramatically in the United States over the last 40 years. This has been accompanied by a growing concern that many people are being economically "left behind." Yet standard measures of the proportion of people who left out of the economy, such as the absolute and relative poverty rates, have not increased during this time. I argue that this discrepancy arises because standard poverty measures are poorly equipped to identify the full extent of economic exclusion generated by today's economy. In particular, they are not able to identify the economic exclusion generated by two major economic trends of recent decades: the concentration of purchasing power among the very rich and the growth of geographic income disparities. I propose a measure of economic exclusion, benchmarked to the income at which the median dollar is earned rather than that of the median person, that is sensitive to these developments. Trends in economic exclusion as defined by this measure diverge sharply from trends in poverty over the last 40 years, showing much larger increases in economic exclusion over time and higher rates of exclusion in high income regions.