Wealth Inequality

  • Edward B. Barbier


Up to now, this book has focused on how nature is used to create wealth. Here, we explore how that wealth is distributed, and its economic implications.


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  1. 1.
    This phrase comes from the title of the book by Claudia Goldin and Lawrence F. Katz (2008) The Race Between Education and Technology. Cambridge: Harvard University Press, as their work motivates the discussion of the overpricing of human capital in this chapter. In their book, Goldin and Katz provide substantial historical and contemporary evidence that this “race” is the main cause of the rise in the wage premium for skilled workers in the United States, and the subsequent growth in income inequality since 1980.Google Scholar
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    The link between overpricing of human capital, skill-biased technological change and rising wealth and income inequality is again indicated by evidence from the United States. For example, Steven N. Kaplan and Joshua Rauh (2013) “It’s the Market: The Broad-Based Rise in the Return to the Top Talent”, Journal of Economic Perspectives, 27(3): 35–56, conclude (p. 53): “Overall, we believe that our evidence remains more favorable toward the theories that root inequality in economic factors, especially skill-biased technological change, greater scale, and their interaction. Skill-biased technological change predicts that inequality will increase if technological progress raises the productivit y of skilled workers relative to unskilled workers and/or raises the price of goods made by skilled workers relative to those made by unskilled workers. For example, computers and advances in information technology may complement skilled labor and substitute for unskilled labor. This seems likely to provide part, or even much, of the explanation for the increase in pay of professional athletes (technology increases their marginal product by allowing them to reach more consumers), Wall Street investors (technology allows them to acquire information and trade large amounts more easily) and executives, as well as the surge in technology entrepreneurs in the Forbes 400. Globalization may have contributed to greater scale, but globalization cannot drive the increase in inequality at the top levels given the breadth of the phenomenon across the occupations we study.”CrossRefGoogle Scholar
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Copyright information

© Edward B. Barbier 2015

Authors and Affiliations

  • Edward B. Barbier
    • 1
  1. 1.University of WyomingUSA

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