Given the wide and worsening income gap in America, I thought there would be an abundance of academic interests and studies on this topic. My research however yielded only limited results, and those who did research in this area are mostly European scholars. The most well-known is possibly Thomas Piketty, a French Economist. Surprisingly income inequality hasn't garnered as much attention from American economists. I was puzzled.
This has something to do with the history and ideology of American economics, one source revealed (1). Several factors could explain why the relative lack of interest from American economists:
The influence of free market economic thoughts, the most representative of which is the Chicago School. The Chicago School economists focus on how to promote growth, competition and free market. With their heavy influence in the field, the center of attention by American economists on economic growth wouldn’t come as a surprise.
The implied recognition of income inequality as a necessary consequence of economic growth. American economists tend to agree that globalization and technology change lead to a bifurcated world: people with the skills fare well and those without the skills do not. With growth above everything else, why focus on its byproduct?
Americans tend to think that those who are well-off have earned it and are also entitled to keep it. This is shown in America’s top tax rates, which are lower than European nations (for example, the top federal tax rate in the US: 37% vs 45% in the UK and France.)
Different intellectual traditions between America and European nations. American economists are more business-focused while their European counterparts are more policy-oriented.
But among American economists, the topic of income disparity appears to catch on. More studies are being done by researchers from NBER and top universities. Increasingly economists are turning their attention to one of the most pressing issues facing our society. I hope public policies would follow up and support equitable growth.