A column by Christopher Mims in the Wall Street Journal summarized academic research showing that some firms
Question:
A column by Christopher Mims in the Wall Street Journal summarized academic research showing that some firms in the same industry have become much more productive than other firms. As we saw in Chapter 16, Section 16.1, wages depend on the marginal productivity of labor. Mims draws the conclusion that “the rise in [income inequality] since 1978 is almost entirely attributed to an increase [in wages] at more-productive firms that occurred as pay at less-productive firms remained relatively static.” If the main cause of increasing income inequality is differences in worker productivity across firms, do you believe that changes in individual income tax rates are likely to be the best way of reducing inequality? Briefly explain.
Step by Step Answer:
Changes in individual income tax rates are unlikely to be the best way of reducing income inequality ...View the full answer
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