Trends and Cycles in Income Inequality: Why Oh Why Can't We Have a Better Press Corps?
Twitterstorm delong: December 14, 2011

Back in 2004 Greg Mankiw Announced That the Rise in Income Inequality Had Come to an End in 2000!

Greg Mankiw:

Greg Mankiw's Blog: New Data on Income Inequality: In today's NY Times, Paul Krugman calls attention to the update of the Piketty-Saez data on income inequality, although Paul describes the data differently than I would.

Here is what I see: After rising substantially from 1986 to 2000, income inequality is essentially the same in 2004 (the most recent year of data) as it was in 2000.

Click on the data and see for yourself.

Moral: don't confuse a (predictable and predicted) cyclical movement with a change in the trend. Year-2000 income inequality was itself well above trend as a result of the dot-com boom. Year-2004 income inequality was below trend. And income inequality grew very rapidly indeed in 2005, 2006, and 2007.