Must-Read: Laura Tyson and Anu Madgavkar: The Great Income Stagnation

Must-Read: It’s time to work toward a better definition of “equitable growth” than the vague and implicit one that we have been working with so far. Elements needed are that prosperity should be (a) broad-based, (b) fair, and also (c) substantial. That means substantial economic growth, but it also means conforming to people’s reasonable expectations of how economic growth was going to be divided and a relatively low level of inequality:

Laura Tyson and Anu Madgavkar: The Great Income Stagnation:

MGI surveys in France, the United Kingdom, and the US have found…

…that people whose incomes are not growing, and who do not anticipate an improvement, tend to view trade and immigration much more negatively than those who are experiencing or foresee gains. The Brexit vote in the UK and bipartisan opposition to trade agreements in the US are clear signs of this. Recent debate about income inequality in the US and other developed countries has focused on the rapid surge in incomes for the few. But stagnating or falling incomes for the many add a different dimension to the debate – and demand different types of solutions that emphasize wage growth for the majority of the income distribution. With most households continuing to face stagnating or falling incomes – and with younger generations thus on track to be poorer than their parents – such solutions are urgently needed.