Great compression

from Wikipedia, the free encyclopedia

The Great Compression (from the English Great Compression ) is a period in economic history in the middle of the 20th century, in which differences in income and wealth decreased in many industrialized nations. In the United States, this phase began in the early 1940s. The name goes back to an essay by economists Claudia Goldin and Robert Margo published in 1992 .

more details

Goldin and Margo write in their essay on the Great Compression :

When the United States emerged from the war and depression , not only did it have much lower unemployment than before, it also had an income structure that was more egalitarian than any later. "

A later analysis of income tax contributions by the economists Thomas Piketty and Emmanuel Saez showed that incomes in the USA diverged only slightly from this phase that began in the 1940s until the 1970s. Since the 1980s, there has been a massive increase in income inequality, combined with a concentration of wealth . The same applies to the United Kingdom and Canada. The cause is the abolition or reduction of tax progression . In countries that maintained progressive taxation, such as France and Japan, income inequality and wealth concentration did not occur to the same extent. By Paul Krugman , the Great Compression in the US is the New Deal policy FDR due, including a sharp rise in tax progression, the increasing bargaining power of trade unions as well as the considerable reduction in the wage spread through the wage controls as part of the New National War Labor Board from 1942. The effects would have lasted until the early 1980s.

Individual evidence

  1. ^ The Great Compression: The Wage Structure in the United States at Mid-Century. Page at RePEc . Status: August 28, 2011. (English)
  2. [W] hen the United States emerged from war and depression, it had not only a considerably lower rate of unemployment, it also had a wage structure more egalitarian than at any time since. Claudia Goldin, Robert Margo: The Great Compression: The Wage Structure in the United States at Mid-Century. In: The Quarterly Journal of Economics. MIT Press, vol. 107 (1) 1992, pp. 1-34, p. 2.
  3. ^ The Evolution of Top Incomes: A Historical and International Perspective. Document (PDF; 178 kB) at Berkeley University of California . Status: May 2006. (English)
  4. Introducing This Blog. In: New York Times . September 18, 2007. (English)