Inequality: The Political Economy of Income Distribution.

• Author: Salvatore, Dominick

The stated aim of this book is to (1) presents an overview of the facts and problems associated with income distribution viewed from an historical, geographical, and sociological perspective, (2) develop criteria for estimating more accurately the nature and extent of income inequality, and (3) make recommendations for systematic public policy to promote continued economic growth. The book is only partially successful in reaching its stated objectives.

In a very brief overview chapter, the author points out that the study of income inequality generally face a wide variety of problems ranging from measurement, interpretation, and policy prescriptions. The author promises to develop consistent tools for measuring income inequality and to apply these tools to discover what has happened to income distribution in recent years in the United States and around the world. Chapter 2 broadly examines the meaning and causes of income inequality focusing on imperfect justice, rent, market power, discrimination, and comparative advantage. Chapter 3 is a pedagogical review of measurements of inequality ranging from the Gini index and the Lorenz' curve and various types of distribution functions. Chapter 4 concentrates on inequality in the United States and focuses on the recent trend toward increased inequalities as the result of the Reagan's misconceived supply side economics. The author begins by examining income inequality among households, families, individuals, farm versus nonfarm, and black-white inequality, and then reviews long-term trends and the effect of sex discrimination and taxation on income inequality.

In Chapter 5, the author shifts from internal income inequality (i.e., within a nation) to international income inequality among nations. He begins by pointing out the well-known difficulties in comparing international income inequalities using exchange rates to convert national per capita income into a common currency and the need to adjust that measure using Kravis, Heston, and Summers concept of Purchasing Power Parity (PPP). Still, he points out, some conceptual problems of comparability remain. In Chapter 6, the author returns to the analysis of internal income inequality in the process of economic development. After restating the Kuznets hypothesis that postulates that income inequalities first...