Productivity Is the Reason

The author responds to an article in the July/August 2011 issue of the journal entitled "The Impact of Globalization on Income and Unemployment," by Michael Spence. According to the author, Spence identifies globalization as the primary cause of increasing unemployment and income equality in the U.S. from the 1990s through 2008. The author argues that Spence uses flawed reasoning to blame U.S. trade with developing nations and domestic tax policies for an increase in income inequality in the U.S. The author contends that higher productivity has resulted in a decline in U.S. jobs. The author also asserts that U.S. policymakers would be mistaken to utilize Spence's arguments in understanding and determining responses to income inequality.