The Great Divergence is a term given to a period, starting in the late 1970s, during which income differences drastically increased in the United States and, to a lesser extent, in other countries. The term originated with the

Nobel laureate The Nobel Prizes (, ) are awarded annually by the Royal Swedish Academy of Sciences, the Swedish Academy, the Karolinska Institutet, and the Norwegian Nobel Committee to individuals and organizations who make outstanding contributions in th ...

Princeton Princeton University is a private Ivy League research university in Princeton, New Jersey, United States. Founded in 1746 in Elizabeth as the College of New Jersey, Princeton is the fourth-oldest institution of higher education in the Unit ...

economist and ''

The New York Times ''The New York Times'' (''NYT'') is an American daily newspaper based in New York City. ''The New York Times'' covers domestic, national, and international news, and publishes opinion pieces, investigative reports, and reviews. As one of ...

'' columnist

Paul Krugman Paul Robin Krugman ( ; born February 28, 1953) is an American New Keynesian economics, New Keynesian economist who is the Distinguished Professor of Economics at the CUNY Graduate Center, Graduate Center of the City University of New York. He ...

, and is a reference to the "

Great Compression The Great Compression refers to the period of substantial wage compression in the United States that began in the early 1940s. During that time, economic inequality as shown by wealth distribution and income distribution between the rich and poo ...

", an earlier era in the 1930s and the 1940s when incomes became more equal in the US and elsewhere. The Great Divergence contrasts with the "Great Prosperity" or

Golden Age of Capitalism Capitalism is an economic system based on the private ownership of the means of production and their use for the purpose of obtaining Profit (economics), profit. This socioeconomic system has developed historically through several stages a ...

, where from the late 1940s to mid 1970s, at least for workers in the advanced economies, economic growth had delivered benefits broadly shared across the earnings spectrums, with inequality falling as the poorest sections of society increased their incomes at a faster rate than the richest. Scholars and others differ as the causes and significance of the divergence,Krugman, Paul.
The Rich, the Right, and the Facts: Deconstructing the Income Distribution Debate
prospect.org, 19 December 2001Sowell, Thomas.
Perennial Economic Fallacies
" ''Jewish World Review'' 7 February 2000, URL accessed 3 November 2011. which helped ignite the

Occupy movement The Occupy movement was an international populist Social movement, socio-political movement that expressed opposition to Social equality, social and economic inequality and to the perceived lack of real democracy around the world. It aimed primar ...

in 2011. While education and increased demand for skilled labour is often cited as a cause of increased inequality, especially among conservatives, many social scientists point to conservative politics,

neoliberal Neoliberalism is a political and economic ideology that advocates for free-market capitalism, which became dominant in policy-making from the late 20th century onward. The term has multiple, competing definitions, and is most often used pej ...

economic and social policiesDavid M. Kotz,
The Rise and Fall of Neoliberal Capitalism
'' (Cambridge, Massachusetts: Harvard University Press, 2015),
p. 43
/ref> and public policy as an important cause of inequality; others believe its causes are not well understood.Congressional Budget Office: Trends in the Distribution of Household Income Between 1979 and 2007
October 2011.

References

{{reflist Economic inequality in the United States Income in the United States Economic history of the United States

See also

References