What is the Relationship Between Income Inequality and Growth?

Income inequality has increased dramatically since the late 1970s. As a result, economists have sought to explain the cause of this increase, and its impact on growth. In a recent PERI Working Paper, Thomas Palley explores the ways that functional and personal income distribution impact growth. By using neo-Kaleckian and Cambridge growth models, he finds that contrary to widespread claims, inequality per se does not impact growth. Instead, Palley writes, both growth and inequality are impacted by changes in the underlying form and pattern of income payments. 

>> Read "Inequality and Growth in Neo-Kaleckian and Cambridge Growth Theory"

Transforming Economic Thinking to Achieve Social Justice

Economic policy has not adequately addressed the pressing challenges we face today: extreme poverty, widespread joblessness and precarious employment, increased inequality, and large-scale environmental threats. A new book, Rethinking Economic Policy for Social Justice, by PERI Associate Director James Heintz and co-authors Radhika Balakrishnan and Diane Elson, shows how human rights have the potential to transform economic thinking and policy-making with significant consequences to social justice. They make a case for a new normative and analytic framework, based on a broader range of objectives than such standard narrow goals as GDP growth. 

>> Read more about Rethinking Economic Policy for Social Justice by Radhika Balakrishnan, James Heintz, and Diane Elson

>> Purchase the book

A $15 Federal Minimum Wage: Who Would Benefit?

Democratic presidential candidate Senator Bernie Sanders is calling for raising the federal minimum wage from $7.25 to $15.00 per hour. In a PERI Research Brief, Jeannette Wicks-Lim shows that a $15.00 minimum wage could deliver raises to approximately 65 million workers—more than two-fifths of the U.S. workforce. Her research shows that large percentages of workers from every major demographic group would receive raises from this wage hike. At the same time, since working women, African-Americans, Latinos, and workers from low-income households disproportionately earn near or below $15 an hour, these groups would benefit the most from a $15 minimum wage.

>> Read “A $15.00 Federal Minimum Wage: Who Would Benefit?”

The Revenue Potential of a Financial Transaction Tax for U.S. Financial Markets

This paper by PERI Co-Director Robert Pollin, Associate Director James Heintz as well as Thomas Herndon, a PERI Research Assistant, estimates the revenue potential of a financial transaction tax (FTT) for U.S. financial markets. It focuses on analyzing the revenue potential of the Inclusive Prosperity Act that was first introduced into Congress in 2012. The authors conclude conservatively that the net revenue potential of this U.S. FTT as being around $300 billion per year, which equals approximately 1.7 percent of current U.S. GDP. This U.S. FTT should also not produce significant negative effects on productive investment spending by U.S. nonfinancial corporations.

>> Read "The Revenue Potential of a Financial Transaction Tax for U.S. Financial Markets"

>> Watch Robert Pollin on The Real News Network: "Sanders' Wall Street Tax Could Raise $300 Billion a Year"

Climate Policies That Yield Present-Day Benefits

Climate change mitigation policy is often framed as a tradeoff between the welfare of the present generation and that of future generations. In this new PERI working paper, James K. Boyce, Director of PERI’s Program on Development, Peacebuilding, and the Environment, writes that it is possible to design climate policies that bring near-term benefits to individuals today. Boyce considers two benefits: the cost savings of reducing outdoor air pollution (including those associated with 3.7 million of premature deaths annually worldwide), and income gains from egalitarian distribution of the rent created by carbon pricing.

>> Read “Distributional Issues in Climate Policy: Air Quality Co-benefits and Carbon Rent”

The Impact of Neoliberal Policies on Food Prices

International prices of agricultural commodities, especially food grains, have been rising at a pace not experienced since the 1970s. The upsurge in food commodity prices has been a matter of major concern for developing nations. In a recent article in Agrarian South: Journal of Political Economy, PERI Research Fellow Shouvik Chakraborty disputes the mainstream argument that increased consumption in India and China is responsible for the price hike. Instead, he argues, the pursuit of neoliberal policies has made agriculture an unlivable occupation, and has, in turn, caused a decline in production.

>> Read “Explaining the Rise in Agricultural Prices: Impact of Neoliberal Policies on the Agrarian Economy”        

Weaknesses in the UK Economy Under Austerity

Economists for Rational Economic Policies, a UK-based network, has published “The Cracks Begin to Show: A Review of the UK Economy in 2015.” This study argues that, despite assurances from the conservative British government to the contrary, the austerity policies adopted by that government have been unsuccessful in reducing government deficits and debt at the promised rate. At the same time, they argue that the UK government’s austerity policies have led to major reductions in public services and especially for services that support people in poverty.

>> Read "The Cracks Begin to Show"
>> Watch the authors interviewed on The Real News Network: Interview Part 1Interview Part 2