Drivers of inequality: Trade Shocks Versus Top Marginal Tax Rates

Douglas Campbell and Lester Lusher at VoxEU:

Drivers of inequality: Trade shocks versus top marginal tax rates: Growing wealth inequality has been one of the most pressing political issues since the Great Recession. However, there is a relative lack of consensus on the significant drivers of this trend. This column investigates the contribution of globalization, via international trade, to US wealth inequality. Although trade is found to have had important effects on certain parts of the US labor market in the early 2000s, the growth in US inequality since 1980 can be traced back to Reagan-era tax cuts. ...