An Analysis of the Impacts of Economic Growth on Income Inequality

Abstract

The coinage of the term “gilded” refers to the “golden” and luxurious life of industrial leaders contrasting with the overlooked, destitute conditions of the working class at the turn of the twentieth century. This income inequality has held continuity into the present day, even though the American economy has grown dramatically over time with increased industry diversification and employment opportunities. This result may strike one as odd, however, because if there is more money circulating in the economy, why is this additional supply not flowing into the hands of citizens in various classes and demographics? Why does it tend to flow to one specific demographic? This paper seeks to investigate these questions and understand the relationship between economic growth and income inequality. By comparing and analyzing holistic data regarding historical social ills, federal tax policies and welfare relief, and unionization, this paper will illuminate many factors contributing to the unequal distribution of wealth in the United States today.