Understanding Income Inequality: The Role of Technologies and Consumer Demand

 

Rising income inequality has been a defining feature of developed economies since the 1980s. While technological change is widely recognized as a key driver of growing income disparities—benefiting highly skilled workers while displacing routine jobs through automation—this tells only half the story. Consumer spending has also evolved substantially, affecting demand for workers producing goods that we choose to spend our money on. This talk summarizes the key theories linking changes in production to income inequality and presents new evidence on how changes in consumer demand have played a crucial yet overlooked role in moderating income inequality.