Macro Perspectives on Income Inequality

Bibliographic Data

ID14855435
AuthorsMatthieu Gomez (Matthieu Gomez is Associate Professor of Economics, Columbia University, New York City, New York. His email address is ., corresponding author)
Year2025
Volume39
Issue2
Pages127-148
Publication date2025-05-01
Open AccessYes
TypeARTICLE
VenueThe Journal of Economic Perspectives (JOURNAL)
Journal identifiersISSN: 0895-3309 • E-ISSN: 1944-7965
PublisherAmerican Economic Association (PUBLISHER • US)
DOI10.1257/jep.20241435
OpenAlexW4410236149
LanguageEN
Citations received1
References cited12

Inequality has become a defining challenge for modern economies and a central focus of economic research over the past two decades. I begin by revisiting the foundations of income measurement, showing that standard definitions — taxable income, factor income, and Haig-Simons income — suffer from important conceptual limitations. I contrast these income measures with the ideal notion of income from a welfare perspective — Hicksian income — which captures an individual’s ability to consume or save for future consumption. I then examine the drivers of rising top income inequality, with particular attention to the surge in entrepreneurial incomes. I highlight three key forces behind this phenomenon: higher returns on capital (technological factors), lower external financing costs (financial factors), and a lighter tax burden on business owners (fiscal factors)

Economic inequality · Economics · Inequality · Macro · Social inequality · Sociology · Computer Science · Economic Theory and Policy · Housing, Finance, and Neoliberalism · Income, Poverty, and Inequality · Mathematics

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