It’s Not the Innovation, It’s the Distribution. Lane Kenworthy on Tyler Cowen
Lane Kenworthy has provided the best response that I’ve yet seen to Tyler Cowen’s assertion that median family income growth has declined over recent decades because of a decline in innovation.
Here’s the key graphic (red arrows mine):
Lane points out:
|Annual Percentage Increase|
|GDP per family||2.6%||1.7%|
|Median family income||2.7%||0.7%|
|GDP per family||$52K||$82K|
|Median family income||$26K||$13K|
Median family income was $64,000 in 2007. Had it kept pace with GDP per family since the mid-1970s, it instead would have been around $90,000.
It’s not at all clear to me how a decline in innovation would result in these distributional changes. Doesn’t everything trickle down?