Question

How do we measure inequality and what has happened to inequality in the US over the last 25 years?

Answer 1

Solution:

In US economy, the various ways to measure economic inequqlity are:-

1. Income inequality

2. Consumption inequality

3. Household wealth

The one way i.e. the most cited measures of inequality involve income.The recent report of Organizaton for Economic Coperation and Development " In OECD Countries the richest 10% of the ppulation earns 9.6 times the income of the poorest 10%"

According to the report of U.S Census Bureau, the top 5% household received 21.8% of "equivalence adjusted" aggregate income in 2014., while the bottom 60% received just 27.1%

In U.S income inequality has been increasing steadily since 1970s and now has reached levels not seen since 1928, which means the share of nation's income received by higher income households has been increased. This trend is evident with income measured both before taxes as well as after taxes and transfer payments.