In “Economic Elites, Investments, and Income Inequality” from the academic journal, Social Forces, graduate Ph. D student from Ohio State University, Michael Nau presents throughout his study the rise of an additional factor that has evidently influenced the concentration of vast amounts of income among the elite class, income from investments. In this era, the common belief is that demographics, labor market institutions, and technology are causing the inequality to rise and for the elites to produce astounding amounts of income. Nau’s findings present how the debate over the incomes of the elites has to be expanded apart from the ‘working rich class’ to also include the income producing wealth. In addition, Nau presents how the study findings emphasize the essence of adding the wealth and property ownership to the study of income inequality. The main problem that Nau explains in his research is the issue of how investing has emerged a dramatic shift in income shares. With this in mind, Nau presents two important unanswered questions, to what extent is the elite’s concentration of income a function of non-wage income growth, for example its investment gains and how has the top’s investment income growth changed the collectively outlines of income inequality?
Explaining that the returns of labor are very critical to contemporary research on inequality, and that most households depend on wages for their income, Nau argues how the labor markets and wages cannot describe the recent concentration of enormous amounts of income among the elites and the one percent. He explains how there are different views on the explanation on the rising wage difference among diverse groups of workers. For instance, the Skill- Biased Technological Change view states that the introduction of computer technology increased the wages and production of computer skill workers, leaving behind those who did not participate in this type of work. Furthermore, he mentions the sociological and economical view, which is the belief that the rise of inequality is due to institutional changes such as the fall of minimum wage and the loss of union power. However, when it comes to the income of the elites he argues that the income growth due to investment is a imperative fraction to this confusion of how the wealthy are accumulating unlimited amounts of money and causing social inequality.
Nau then explains how there are three hypotheses to the shift in economic power toward the investors and their concentration and growing income share during the decades of 1990s to 2000s. In the first place, Nau presents the hypotheses that the income concentration of the wealthiest was being driven by investment gains. At the same time, he presents that also at this time, top-income households took on the title of investors imitating their behaviors and characteristics. Finally, his third hypothesis states that both the contribution of investment income-to-income inequality increased...