Since the 1970s households in the United States and other advanced economies have seen their income growth slow as a result of slower overall economic growth and rising inequality—compounded in many countries by men withdrawing from the workforce. In China and many emerging economies, households have seen substantial income gains—as fast overall economic growth has outweighed the rise in inequality. This course will analyze the ways in which growth, inequality and labor force participation shape the incomes of typical households, focusing on the United States, other advanced economies, and to a lesser degree developing economies. The course will consider the causes of the changes in growth and inequality a well as their relationship—asking questions like whether higher growth inevitably entails higher inequality and whether inequality can be bad for growth. In addition, we will consider the positive and normative evaluation of policies that entail tradeoffs between growth and inequality.
This course forms a unified sequence with SUP-206 “The Causes and Consequences of Inequality” taught in the spring which provides a more microeconomic and focused perspective on inequality. While either course can be taken separately, taking them together as a sequence is recommended for students wanting to pursue a more in depth study of household incomes and inequality.
Prerequisites: There are no formal prerequisites but familiarity with economics and elementary statistics is strongly recommended. Students lacking this background may find the material challenging.