Income inequality in the US is pretty stark. We have tax and other policies that favor the wealthy, but we also have a system that rewards innovation and the creation of successful companies and that is where most large wealth comes from. A new paper from the National Bureau of Economic Research examines factors that appear related to income inequality and particularly to persistent low income. The woke among us claim that the US is irredeemably racist and that minority groups struggle because of that racism. It’s bullshit and this paper has a surprise for them. (NBER Paper)
The authors attempt to find out if the factors behind income inequality are due to differences between various ethnic and other groups or to differences within those groups. Guess what? Turns out it is almost all due to within group differences, which puts the racism theory right where it belongs–in the garbage can. Here is the money quote:
“inequality among individuals descended from a common ancestral origin is the dominant and overwhelming source of contemporary income inequality in the United States. Inequality within ethnic groups is an order of magnitude greater than inequality between them. Specifically, the decomposition reveals that within-group inequality accounts for a staggering 96% of total income variation, while between-group inequality contributes only 4%.”
The authors examined inequality over the last four decades and found no change in the relative contribution of factors to income inequality. They say that unequal opportunities and different productive behaviors within a group are the causes of this inequality. The primacy of these factors is found for both genders (yep, there are only two) and for all age groups. It also persists when educational attainment is considered. For first-generation migrants, between group differences account for a slightly larger impact on income inequality, but that disappears within a couple of generations.
