Predatory Lending

On the other hand, Jonathan Rothwell notes that studying the "increase in the income
share of the top 1 percent" in countries in the OECD between 1980 and 2014 finds "no
correlation across countries" between the change in inequality and change in labor's
share of GDP. Both inequality and labor's share of GDP have risen in the UK, while in
the Netherlands labor's share has fallen and inequality is unchanged.
Information Technology
The growth in importance of information technology has been credited with increasing
income inequality. Technology has been called "the main driver of the recent increases
in inequality" by Erik Brynjolfsson, of MIT. In arguing against this explanation, Jonathan
Rothwell notes that if technological advancement is measured by high rates of
invention, there is a negative correlation between it and inequality. Countries with high
invention rates — "as measured by patent applications filed under the Patent
Cooperation Treaty" — exhibit lower inequality than those with less. In one country, the
United States, "salaries of engineers and software developers rarely reach" above
$390,000/year (the lower limit for the top 1% earners).
Globalization
Change in real income between 1988 and 2008
at various income percentiles of global income
distribution.
Trade liberalization may shift
economic inequality from a global to
a domestic scale. When rich
countries trade with poor countries,
the low-skilled workers in the rich
countries may see reduced wages
as a result of the competition, while low-skilled workers in the poor countries may see
increased wages. Trade economist Paul Krugman estimates that trade liberalisation has
had a measurable effect on the rising inequality in the United States. He attributes this
trend to increased trade with poor countries and the fragmentation of the means of
production, resulting in low skilled jobs becoming more tradeable. However, he
concedes that the effect of trade on inequality in America is minor when compared to
other causes, such as technological innovation, a view shared by other experts.
Empirical economists Max Roser and Jesus Crespo-Cuaresma find support in the data
that international trade is increasing income inequality. They empirically confirm the
predictions of the Stolper–Samuelson theorem regarding the effects of international
trade on the distribution of incomes. Lawrence Katz estimates that trade has only
accounted for 5-15% of rising income inequality. Robert Lawrence argues that
technological innovation and automation has meant that low-skilled jobs have been
replaced by machine labor in wealthier nations, and that wealthier countries no longer
have significant numbers of low-skilled manufacturing workers that could be affected by
competition from poor countries.
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