The year 2015 was another big year for inequality books: Inequality: What Can be Done? by Anthony Atkinson, The Globalization of Inequality by François Bourguignon, Wealth, Poverty and Politics by Thomas Sowell.
And now comes another: Inequality and Economic Policy: Essays in Memory of Gary Becker by John Cochrane, Chad Jones, Eddie Lazear, Casey Mulligan, Kevin Murphy, Lee Ohanian, Jim Piereson, Josh Rauh, Emmanuel Saez, George Shultz, and Jörg Spenkuch—eleven top economists presenting their research, explaining their views, reacting to each other, and answering tough questions. The book emerged from a memorial conference for Gary Becker, who began diagnosing and proposing solutions to income inequality and intergenerational mobility problems decades ago. It is edited by Tom Church, Chris Miller, and me. Eddie Lazear and George Shultz offer wonderful reminiscences about Gary Becker’s life and career.
In my view, this multi-authored book naturally reveals points and counterpoints that single authored volumes cannot, whether the ones listed above or Thomas Piketty’s Capital in the Twenty-First Century, which triggered the recent volley. Take the debate in Inequality and Economic Policy between Kevin Murphy and Emmanuel Saez on the causes of rising top incomes. Murphy focuses on human capital, arguing that high demand and low supply of highly educated workers have pushed up top wages; he argues that helping lower-skilled workers increase their human capital would reduce inequality while promoting economic growth. Saez suggests that rent-seeking explains much of the increase in top incomes; he argues that government taxes and transfers need to play a big role in reducing inequality.
As a prelude Jim Piereson surveys the Piketty-Saez data showing a remarkable increase in top incomes. He argues that inequality presents a serious intellectual and policy challenge because many policies that might reduce inequality might also slow economic growth.
Josh Rauh shows that top incomes have increased across different sectors, from corporate managers to sports stars. He argues that broad market forces including globalization and technological change caused top incomes to rise.
Chad Jones examines how the processes of creative destruction and innovation interact to shape the returns to entrepreneurship. He argues that a wide range of policies—from research subsidies to barriers to market entry—affect inequality.
Jorg Spenkuch explores the relationship between intergenerational mobility and income inequality. He finds that parents with high human capital invest more effectively in their children’s human capital, noting that this explains why children of parents at the top of the income distribution are themselves likely to reach the top of the income distribution.
Casey Mulligan explores the downsides to policies used to combat inequality, showing for example, that health insurance policies and anti-poverty programs raise implicit tax rates on employment, causing lower employment.
John Cochrane argues that inequality is an unhelpful intellectual framework, because it distracts from challenges such as promoting economic growth and decreasing poverty.
Lee Ohanian shows that improved education and increased immigration can raise wages for low-income workers.
George Shultz discusses two fascinating case studies of organizations that work to fight poverty and related social ills, arguing that these can be scaled up.
The give and take of these authors illustrates the complexity of scholarly debate about income inequality, but it lays out a rich agenda for future research. The authors not only remember Gary Becker, they continue his scholarly traditions.