Monday, December 17, 2012

Brad DeLong reconsiders a Richard Freeman argument

Here. That's always a worthwhile thing to do.

He's talking about international pressures on the U.S. wage structure. I think I would at least move it up to third (Brad has it at fourth), and while the tax structure certainly plays a role I can't see how moving from the Clinton rates to the Bush/Obama rates accounts for much of the last twenty years of pressure on inequality. I don't think inequality is that sensitive to a couple percentage points on or off the top bracket.

Part of the problem is that labor demand has changed. If you believe Katz, Autor, etc. you think that job growth has been concentrated in the lowest and highest wage occupations. Granted, their findings are very sensitive to occupational classifications, but if you're skeptical of some of their conclusions on those grounds you usually converge on an educational problem as the explanation (particularly educational performance below the bachelor's degree), and education is first on Brad's list. Both of these seem more important to me than taxes (although Brad is certainly right that if the tax debate has shown us anything it's that the bar for "communist" has been set ridiculously low).

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