abstract: 'Increasing inequality cannot be a long-run steady state i.e. a trend

  that can continue indefinitely. Because the bottom 99\% and top 1\% in

  the U.S. and Canada have had very different rates of growth of market

  income since the 1980s, consumption and savings flows have necessarily

  changed. If aggregate expenditure is to equal aggregate income, the

  added savings of the increasingly affluent must be loaned to balance

  total current expenditure but increasing indebtedness implies financial

  fragility, periodic financial crises, greater volatility of aggregate

  income and, as governments respond to mass unemployment with

  counter-cyclical fiscal policies, a compounding instability of public

  finances. In Canada and the United States, increasing economic

  instability is thus an implication of increasing inequality. Either an

  acceleration of the income growth rate of the bottom 99\%, or a decline

  in income growth of the top 1\%, could equalize income growth rates, and

  thereby stabilize market income shares and macro-economic flows.

  However, there is no evidence that purely economic forces will produce

  either outcome anytime soon in Canada or the U.S. any return to

  stability depends on political economy.

  The establishment of social transfer programs, rural out-migration,

  expansion of school enrolment, increased female employment and declining

  birth rates are large ``one-time{''''} social changes with big income

  impacts for working families. In Canada and the U.S. such trends helped

  stabilize inequality from 1940 to 1975, while in Mexico they have

  reduced inequality (albeit from a high level) in recent years. (C) 2013

  Elsevier B.V. All rights reserved.'
affiliation: 'Osberg, L (Corresponding Author), Dalhousie Univ, 6214 Univ Ave,POB
  15000, Halifax, NS B3H 4R2, Canada.

  Dalhousie Univ, Halifax, NS B3H 4R2, Canada.'
author: Osberg, Lars
author-email: lars.osberg@dal.ca
author_list:
- family: Osberg
  given: Lars
da: '2023-09-28'
doi: 10.1016/j.econmod.2013.06.039
eissn: 1873-6122
files: []
issn: 0264-9993
journal: ECONOMIC MODELLING
keywords: 'Economic inequality; Unbalanced growth; Economic instability; Financial

  fragility; Structural change'
keywords-plus: INCOME INEQUALITY; UNITED-STATES; CANADA; EARNINGS
language: English
month: SEP
number-of-cited-references: '70'
orcid-numbers: Osberg, Lars/0000-0001-9643-9269
pages: 918-930
papis_id: e5664236f69a5f59327188c01f20d668
ref: Osberg2013instabilityimplicati
times-cited: '4'
title: 'Instability implications of increasing inequality: Evidence from North America'
type: Article
unique-id: WOS:000329532100109
usage-count-last-180-days: '0'
usage-count-since-2013: '21'
volume: '35'
web-of-science-categories: Economics
year: '2013'