04-14-2014, 04:34 AM
Anyway, I stumbled on this figure below, from a very insightful paper by Philippon and Reshef. The figure plots an index of financial deregulation against relative pay in the industry (an increase in the deregulation index implies looser regulation).
A Striking Picture of Pay and Deregulation in Finance | Jared Bernstein | On the Economy
The figure below from Piketty’s book shows the increase in the share of US income going to the top 10%, i.e., the top decile. The increase in the wage share since 1970 is about 10 percentage points, or about two-thirds of the increase. The increase in capital income explains the other third, which ain’t nuttin,’ but the wage story told in the NYT piece and the figure below is still the main driver.
Piketty also shows how the rise in supersalaries has changed the composition of income at the very top. Back in 1929 (the last time inequality was at today’s levels), income from capital comprised the main source of income for the top 1%; today, you’d have to go all the way up to the top 0.1% before capital overtook earnings as the main source of income.