This is a note on one aspect of the divergence since the late 70's of median family income from GDP / Capita. In Part 2 of my analysis (previously reported) I found that the divergence exactly tracks the divergence of wage/salery growth from productivity growth. My research into cause(s) of the divergence is still on-going.
One anecdotal reason shown by academics focuses on the change in economic inequality over the same period... the increasing share of national income going to the top income brackets since the early '80's through to present. Most of the focus of academics in the economic inequality arena is on tax policy change causation... starting with the major change in tax rates for the upper income brackets (58% cut to 28%) with increases in the rates for lower incomes (11% raised to 13%). While this single act contributed significantly to the increase in inequality since then, it is not by itself the underlying reason ---- since divergence of median family incomes to GDP/capita has continued to increase without abatement even though other tax policy changes since Reagan have mitigated (but not eliminated) it's effect on income inequality increases. Reagan's tax cut for the wealthy provided a step function change in income inequality.... it didn't provide a reason for continuing and persistant increasing divergence of median to upper incomes.
What economic inequality data over time does show is that the share of upper incomes of total income has continued to grow. This is therefore a clue into the reasons for divergence of income from GDP / capita growth... but not the fundamental "cause". It's a symptom of the cause --- just one of many outgrowths of it.
An article I came across today sheds some light on a couple of fundamental causes ---- one of which is educational inequality in primary, secondary, and upper education. I've written previously about the gross lack of equal opportunity as a primary cause of a lack of educational attainment and economic lower incomes --- primarily related to the fact that those born into lower income family's are far less likely to achieve educational attainments than those born into upper income levels.... for several reasons, but the dominant ones being lack of environment, health, experiences, & parental time available to lower income family's ---- wherein the lower income environment also translates to educational systems not nearly as well funded at those in upper income environments.
I've attached the excerpt from the article (see attached doc) that relates to the educational inequality impact on economic inequality and why the author believes this is one of the primary causes for the growth of economic inequality... i.e. the growth of upper income share relative to the middle class's share of total income. In the context of causes of divergence middle class income growth relative to GDP growth per capita since the late '70's the article sheds light on how educational inequality of opportunity leads to a divergence of middle class incomes from the upper incomes.
The issue for my research though is what educational opportunity changed & what caused it beginning at a point in time before the economic divergence begins to show up in the late '70's/ early '80's... say approximately 10 - 15 years earlier.. .which would time the change that cause(ed) a reduction of educational opportunity to the mid to late '60's ...say from the '60's.
The change in educational opportunity in that time-frame doesn't necessarily mean that educational systems became less capable or worse, but that opportunities to achieve educational attainment decreased for middle income & below segments of the population while either remaining the same or improving for those above middle income levels. This might for example be related to a demographic shift (baby boomer's entering educational facilities), or to relative cost increases of education, or to a relative reduction educational seats available (at all levels --- increasing class sizes as a result).
For example data (provided in a prior note) shows matriculation rates from a 4 year college are dismally low for lower income levels than the upper income levels which normalizes for the entrance rate difference which is already heavily biased to favor upper incomes over lower and middle class. ... and even lower matriculation rates if the entrants had poor achievement in 8th grade achievement tests in math and reading. This is only to say that there's clear data supporting the fact that those not enjoying upper income levels are far less likely to graduate even if entering a 4 year institution. Thus, for example, if in the 1960's primary & secondary schools were underfunded to maintain the same educational opportunities as previously, then the later college entrants and especially graduation rates would have reduced the relative proportion of poorer & middle class segments obtaining a 4-year college degree, while not decreasing but rather increasing the relative proportion of the upper income levels obtaining a college degree. Without a major change the scenario spirals ever further ... decreasing the rate of matriculation for lower and middle income brackets relative to the upper income brackets... leading therfore to a divergence of incomes and hence a loss of relative shares of income by middle and lower economic brackets.
As the author of the article notes, the effect is to reduce the proportion of the working population that have college degrees relative to the proportion without them... hence driving up the wages/saleries (supply/demand relation) of those with degrees and driving down the wages/salereis of those without them. ... a spiral which continues to increase economic divergence.
The lack of educational opportunity, or the reduction thereof over time from the '60's, may thus be an outgrowth of some element of income & other economic policies or conditions & distributions in the US which began in the '60's which perpetuates and exacerbates the reduction of opportunity as time progresses.
The divergence of income growth of the middle class from growth in GDP per Capita probably can't be fully explained by a reduction in the relative educational opportunities however, so there are other underlying a significant causes My research continues.
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This is a note on one aspect of the divergence since the late 70's of median family income from GDP / Capita. In Part 2 of my analysis (previously reported) I found that the divergence exactly tracks the divergence of wage/salery growth from productivity growth. My research into cause(s) of the divergence is still on-going.
One anecdotal reason shown by academics focuses on the change in economic inequality over the same period... the increasing share of national income going to the top income brackets since the early '80's through to present. Most of the focus of academics in the economic inequality arena is on tax policy change causation... starting with the major change in tax rates for the upper income brackets (58% cut to 28%) with increases in the rates for lower incomes (11% raised to 13%). While this single act contributed significantly to the increase in inequality since then, it is not by itself the underlying reason ---- since divergence of median family incomes to GDP/capita has continued to increase without abatement even though other tax policy changes since Reagan have mitigated (but not eliminated) it's effect on income inequality increases. Reagan's tax cut for the wealthy provided a step function change in income inequality.... it didn't provide a reason for continuing and persistant increasing divergence of median to upper incomes.
What economic inequality data over time does show is that the share of upper incomes of total income has continued to grow. This is therefore a clue into the reasons for divergence of income from GDP / capita growth... but not the fundamental "cause". It's a symptom of the cause --- just one of many outgrowths of it.
An article I came across today sheds some light on a couple of fundamental causes ---- one of which is educational inequality in primary, secondary, and upper education. I've written previously about the gross lack of equal opportunity as a primary cause of a lack of educational attainment and economic lower incomes --- primarily related to the fact that those born into lower income family's are far less likely to achieve educational attainments than those born into upper income levels.... for several reasons, but the dominant ones being lack of environment, health, experiences, & parental time available to lower income family's ---- wherein the lower income environment also translates to educational systems not nearly as well funded at those in upper income environments.
I've attached the excerpt from the article (see attached doc) that relates to the educational inequality impact on economic inequality and why the author believes this is one of the primary causes for the growth of economic inequality... i.e. the growth of upper income share relative to the middle class's share of total income. In the context of causes of divergence middle class income growth relative to GDP growth per capita since the late '70's the article sheds light on how educational inequality of opportunity leads to a divergence of middle class incomes from the upper incomes.
The issue for my research though is what educational opportunity changed & what caused it beginning at a point in time before the economic divergence begins to show up in the late '70's/ early '80's... say approximately 10 - 15 years earlier.. .which would time the change that cause(ed) a reduction of educational opportunity to the mid to late '60's ...say from the '60's.
The change in educational opportunity in that time-frame doesn't necessarily mean that educational systems became less capable or worse, but that opportunities to achieve educational attainment decreased for middle income & below segments of the population while either remaining the same or improving for those above middle income levels. This might for example be related to a demographic shift (baby boomer's entering educational facilities), or to relative cost increases of education, or to a relative reduction educational seats available (at all levels --- increasing class sizes as a result).
For example data (provided in a prior note) shows matriculation rates from a 4 year college are dismally low for lower income levels than the upper income levels which normalizes for the entrance rate difference which is already heavily biased to favor upper incomes over lower and middle class. ... and even lower matriculation rates if the entrants had poor achievement in 8th grade achievement tests in math and reading. This is only to say that there's clear data supporting the fact that those not enjoying upper income levels are far less likely to graduate even if entering a 4 year institution. Thus, for example, if in the 1960's primary & secondary schools were underfunded to maintain the same educational opportunities as previously, then the later college entrants and especially graduation rates would have reduced the relative proportion of poorer & middle class segments obtaining a 4-year college degree, while not decreasing but rather increasing the relative proportion of the upper income levels obtaining a college degree. Without a major change the scenario spirals ever further ... decreasing the rate of matriculation for lower and middle income brackets relative to the upper income brackets... leading therfore to a divergence of incomes and hence a loss of relative shares of income by middle and lower economic brackets.
As the author of the article notes, the effect is to reduce the proportion of the working population that have college degrees relative to the proportion without them... hence driving up the wages/saleries (supply/demand relation) of those with degrees and driving down the wages/salereis of those without them. ... a spiral which continues to increase economic divergence.
The lack of educational opportunity, or the reduction thereof over time from the '60's, may thus be an outgrowth of some element of income & other economic policies or conditions & distributions in the US which began in the '60's which perpetuates and exacerbates the reduction of opportunity as time progresses.
The divergence of income growth of the middle class from growth in GDP per Capita probably can't be fully explained by a reduction in the relative educational opportunities however, so there are other underlying a significant causes My research continues.