received to a perfectly equal distribution of income. Income inequality in the United States increased

substantially from the late 1970s and early 1980s into the 2000s. The two most common explanations that

economists cite are changes in household structures that have led to more two-earner couples and single-

parent families, and the effect of new information and communications technology on wages.

15.5 Government Policies to Reduce Income Inequality

Policies that can affect the level of economic inequality include redistribution between rich and poor, making it

easier for people to climb the ladder of opportunity; and estate taxes, which are taxes on inheritances. Pushing

too aggressively for economic equality can run the risk of decreasing economic incentives. However, a

moderate push for economic equality can increase economic output, both through methods like improved

education and by building a base of political support for market forces.

Self-Check Questions
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