U.S. Income Inequality: Causes and Consequences
This paper examines the growing inequality in the distribution of income in the United States, tracing its origins to shifts in the American labor market beginning in the early 1970s. It explores the primary causes of rising income inequality, including the widening wage gap between skilled and unskilled workers, changes in labor supply and demand driven by technological advancement, and the declining influence of labor unions. The paper also outlines the major consequences of this trend, such as increased vulnerability to financial crises, the shifting of financial liabilities from private institutions to taxpayers, and growing disparities in health and life expectancy. Together, these factors underscore the urgency of addressing income inequality as a central economic and social policy challenge.
- Introduction: Framing U.S. income inequality as a growing concern
- Background on U.S. Labor Market Changes: Labor market shifts since the 1970s explained
- Causes of Increased Income Inequality: Wage gaps, labor demand, and union decline
- Consequences of Increased Income Inequality: Economic instability, debt shifts, health disparities
- Conclusion: Globalization, inequality, and policy urgency summarized
✍️ How to write this paper — guide, tools & examples ▾
What makes this paper effective
- The paper maintains a clear cause-and-effect structure throughout, systematically identifying the origins of income inequality before analyzing its downstream consequences.
- It draws on multiple credible sources, including academic economists and established publications, lending authority to its claims about labor market trends and policy implications.
- The paper contextualizes abstract economic concepts — such as Gini coefficients and skill-biased technological change — within real-world examples like the Occupy Movement and Wall Street financial risk.
Key academic technique demonstrated
The paper demonstrates effective use of economic evidence to build a layered argument. Rather than treating income inequality as a single-cause phenomenon, it disaggregates the issue into distinct labor market mechanisms — wage gaps, shifts in labor supply and demand, and institutional changes — before connecting these causes to specific social and economic consequences. This analytical decomposition is a strong model for undergraduate economics writing.
Structure breakdown
The paper opens with an introduction framing the problem within the broader context of U.S. economic growth, followed by a background section tracing labor market changes since the 1970s. A dedicated section examines causes of inequality, subdivided into wage gap dynamics and labor market factors. A subsequent section addresses consequences, covering economic instability, liability shifting, and health disparities. A brief conclusion synthesizes the argument. The structure is straightforward and logically sequenced, suitable for an undergraduate economics essay.
Introduction
In the past several decades, the United States has continued to experience periods of extraordinary economic growth. This period has been characterized by steady and robust economic growth since the early 1990s, lower unemployment rates, and inflation near zero. As a result of these indicators, the chair of the Federal Reserve Board declared that the performance of the country's economy was as impressive as it had been at any point in the past 50 years. While the benefits of overall economic growth should not be overlooked, broad indicators of prosperity have revealed a less encouraging economic trend over the past 25 years with regard to income distribution (Sundstrom, par. 2). During this period, there has been a significant increase in income inequality, as standard measures of real income and wages show that the poorest and least educated Americans have experienced a declining standard of living since 1975. Therefore, the central concerns for many economists are the causes and consequences of the increase in U.S. income inequality.
Works Cited
Babones, Salvatore. "U.S. Income Distribution: Just How Unequal?" Inequality.org. Program on Inequality and the Common Good, 14 Feb. 2012. Web. 08 Dec. 2012.
Blanchflower, David G., and Matthew J. Slaughter. "The Causes and Consequences of Changing Income Inequality." N.p., n.d. Web. 8 Dec. 2012.
Gudrais, Elizabeth. "Unequal America." Harvard Magazine. Harvard Magazine Inc., July–Aug. 2008. Web. 08 Dec. 2012.
Lynch, David J. "Growing Income Gap May Leave U.S. Vulnerable." Bloomberg. Bloomberg L.P., 13 Oct. 2011. Web. 08 Dec. 2012.
Sundstrom, William A. "The Income Gap." Markkula Center for Applied Ethics, n.d. Web. 08 Dec. 2012.
Create your account
Always verify citation format against your institution’s current style guide requirements.