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Income Distribution, Macroeconomics

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Researchers have put forth various theories to explain the observed widening of the income
distribution in the United States over the past four decades. First, there has been a shift in which
greater amounts of income have come from income sources that are more concentrated in the
first place. In particular, more income has come in the form of capital gains. The second group of
explanations focuses on increased concentrations within sources of income. For example, labor
income has grown more concentrated, business income has grown more concentrated, etc.
Describe the leading theories for the increased concentration of labor income in particular. You
should consider the Congressional Budget Office report, Trends in the Distribution of Household
Income Between 1979 and 2007 (available online at https://cbo.gov/publication/42729) in
formulating your answer.

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