Introduction
Of late, a growing consensus has emerged regarding the growth of inequality in the United States and in other developed countries such as the United Kingdom, Canada, and Australia (Piketty and Saez 2003, 2006; Atkinson et al. 2011). It is now established opinion, both among academics and policymakers, that there has been a steep increase in the level of income inequality in these countries over the last three decades. The most obvious and troubling manifestation of this rising inequality is the ever-growing share of the economic pie that has been flowing to individuals and households at the top of the income distribution.
What explains this surge in the levels of inequality? Several eminent economists ...
