Academics can be dismissive of the concerns of the popular media. But when it comes to the growth of the super-rich, the tabloids may have gotten it right.
The numbers tell the story. According to a study by John Van Reenen of the London School of Economics and Brian Bell of Oxford University, the share of national income earned by the top 1 percent in the United States surged to 18.3 percent in 2007, from 8 percent in 1979. In Britain, the trend was almost identical: The top 1 percent received 15.4 percent of the national income in 2007 compared with 5.9 percent in 1979. And these figures exclude capital gains.
“A lot of the action has been at the very top end of the distribution, the top 1 percent or the top 0.1 percent,” Van Reenen, director of the Center for Economic Performance at the LSE, told me. “It shows you that the media’s focus on the very rich and on bankers’ bonuses wasn’t misplaced.”
But while much of the shift in income distribution has been at the apex of the pyramid, that is not where most academic research on rising income inequality has been focused. If anything, Van Reenen said, academics “have tended to focus on the bottom of the distribution, much more than the top.”
Van Reenen and some like-minded colleagues have been working to fill that gap. Their efforts made it to the economic major leagues in January when Van Reenen convened a panel discussion on extreme wage inequality at the prestigious annual get-together of the American Economic Association.