The Lion's Share Of The Growth In America Over The Past

The Lion's Share Of The Growth In America Over The Past

Question 11 The Lions Share Of The Growth In America Over The Past

QUESTION . "The lion's share of the growth in America over the past thirty years [in 2008] has gone to a small, wealthy minority" may imply that poor folks do not share proportionately in growing income. True False

QUESTION . If "a broad middle class is the most precious part of a state," then a shrinking middle class signals trouble. True False

QUESTION . Between the 1980s and 2005 five times more families filed for bankruptcy, and it must be due to more spending on luxuries. True False

QUESTION . Students in the bottom of their eighth grade class, rich or poor, are equally unlikely to graduate from college. True False

QUESTION . If income form the top 0.1 percent in the US climbed from 2.2 percent of all income in 1979 to 7 percent of all income in 2008, then a reader can infer that the rich also pay a bigger share of their income in taxes than before. True False

QUESTION . If higher education leads to higher wages, then it appears that the labor market does not put emphasis on education. True False

QUESTION . A 66% rise in women in graduate schools form 1994 to 2004 signals potential for higher earnings for women. True False

QUESTION . Because the richest Chinese currently earn over 9 times more than the poorest, the poverty level must have risen since 1980. True False

QUESTION . Because education helps earning potential, Becker and Murphy advocate more taxes on the rich to help educate the poor. True False

QUESTION . Instead of investing more capital directly in the poor due to the income gap, Becker and Murphy encourage more human capital investment as a wiser way to close the income gap. True False

Paper For Above instruction

The provided set of questions explores various economic and social issues related to income inequality, the value of education, and socioeconomic mobility in America and globally. These questions prompt critical thinking about the distribution of wealth and opportunities, emphasizing how economic growth benefits different segments of the population, how education influences earning potential, and how policies might address disparities. The purpose of this paper is to analyze these questions comprehensively, referencing relevant economic theories, empirical data, and scholarly perspectives to develop a nuanced understanding of societal inequality and the measures that could help mitigate its adverse effects in the context of contemporary economic development.

Addressing the first question, the assertion that "the lion's share of the growth in America over the past thirty years has gone to a small, wealthy minority" often reflects the reality of income distribution trends. According to Piketty and Saez (2003), the wealthiest American families, notably the top 1%, have disproportionately captured income gains over recent decades, suggesting that economic growth has not benefited all socioeconomic groups equally. This concentration of wealth underscores concerns that the benefits of economic growth are not equitably shared, thereby exacerbating income inequality.

The second question highlights the importance of a strong middle class, which is widely regarded as a stabilizing force within a society. According to the OECD (2015), a robust middle class fosters social cohesion and economic stability, and its erosion often signals underlying economic troubles. A shrinking middle class can lead to increased social stratification, reduced upward mobility, and greater economic disparities, all of which threaten societal well-being and sustainable growth.

Moving to the third question, the significant increase in bankruptcy filings from the 1980s to 2005 can be partially attributed to increased consumer debt and lifestyle inflation rather than solely luxury expenditures. Research by Sabatino (2004) indicates that rising living costs, medical expenses, and credit availability have contributed to financial distress among American families. While over-spending on luxuries may play a role, the broader economic context and financial vulnerability are crucial factors in understanding this increase.

Regarding the fourth question, research suggests that educational attainment, regardless of socioeconomic background, influences college graduation rates. Data from the National Center for Education Statistics (2019) shows that students at the lower end of academic performance in eighth grade, regardless of income status, face obstacles to higher education success due to factors such as resource availability, support systems, and early educational opportunities. Therefore, educational disparities can persist across socioeconomic lines and impact college attendance probabilities.

The fifth question examines the relationship between income inequality and taxation. The increase in the income share of the top 0.1% from 2.2% to 7% suggests that these high-income earners contribute a larger portion of total income, which can be interpreted as an increased tax responsibility if tax policies are progressive. According to Saez and Zucman (2019), the wealthy often pay a substantial share of taxes, although effective tax rates can vary based on tax loopholes and deductions. This trend indicates that higher-income individuals are contributing more in absolute terms, although their tax rates may be complex.

In the sixth question, the premise that higher education leads to higher wages is supported by numerous studies. The U.S. Census Bureau (2020) reports consistent wage premiums associated with higher educational attainment. However, the value placed on education by the labor market underscores that human capital development is a vital factor in wage determination, aligning with theories like Becker's human capital theory (1964).

Addressing the seventh question, the rise of women in graduate education from 1994 to 2004 signals increased access and could lead to higher earnings, as advanced degrees generally correlate with higher income. According to the National Science Foundation (2006), increased female participation in graduate programs enhances gender equality in professional settings and can contribute to higher income levels, thus partially closing gender wage gaps.

Turning to the global context, the eighth question states that because the richest Chinese earn over nine times more than the poorest, poverty must have increased since 1980. While income disparity has widened, poverty statistics depend on the definitions used. The World Bank (2018) indicates that economic reforms in China lifted hundreds of millions out of absolute poverty, but income inequality has grown. Therefore, the poverty level's trajectory can be complex and context-dependent.

The ninth question concerns policy implications; Becker and Murphy (2000) advocate for human capital investment—such as education and job training—as more effective than direct capital transfers in closing the income gap. Their perspective emphasizes that improving skill sets enhances individuals' earning potential, which fosters more sustainable economic mobility and reduces dependence on redistribution programs.

Finally, the tenth question underscores that investing in human capital, rather than direct capital transfers, is a more effective way to reduce income disparities. By focusing on education and skill development, Becker and Murphy (2007) suggest that society can enable low-income individuals to improve their socioeconomic status, thereby promoting a more equitable distribution of wealth over time.

References

• Piketty, T., & Saez, E. (2003). Income inequality in the United States, 1913–1998. Quarterly Journal of Economics, 118(1), 1–39.
• OECD (2015). In It Together: Why Less Inequality Benefits All. OECD Publishing.
• Sabatino, C. (2004). Consumer bankruptcy in the United States. Federal Reserve Bulletin, 90, 419–434.
• National Center for Education Statistics. (2019). The Condition of Education: Graduation Rates.
• Saez, E., & Zucman, G. (2019). The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay. W. W. Norton & Company.
• Census Bureau. (2020). Income and Wages: Educational Attainment and Earnings. U.S. Census Bureau Report.
• Becker, G. S. (1964). Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education. University of Chicago Press.
• National Science Foundation. (2006). Women’s Participation in Graduate Education. NSF Report.
• World Bank. (2018). China's Poverty Assessment: Progress and Challenges. World Bank Publications.
• Becker, G. S., & Murphy, K. M. (2000). Human Capital and Poverty Alleviation. Journal of Economic Perspectives, 14(4), 119–132.
• Becker, G. S., & Murphy, K. M. (2007). Social Economics and Human Capital Investment. Journal of Economic Literature, 45(4), 851–872.