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For the week of July 25, 2016
COMMENTARY – by Michael J. Hicks, Ph.D.
Was the robust middle class simply a post-war boom?
Any discussion of income inequality has to confront facts about the size and composition and history of the middle class. A simple economic model offers a good start. Suppose that something called 'human capital' is randomly endowed to people in something called a 'normal' distribution, the more familiar 'bell curve.' In this case, a small share of people is endowed with low levels of human capital, and an equally small share has high human capital. Most of us are clustered around the 'average.' This is a compelling assumption, since height, IQ and many other human characteristics follow this pattern.
Read the full text: Human Capital, Monopolies, Unions and the Vanishing Middle Class
Last week's commentary: The Lessons of Pokémon Go
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DID YOU KNOW? – by Srikant Devaraj, PhD
Data on June 2016 housing starts was recently released. New privately owned housing starts totaled 1.19 million units in June, which is a 4.8 percent increase from May, but a 2.0 percent decrease from a year ago.
Increase in single family units (+4.4 percent) and large multifamily (5+) units (+1.6 percent) led to this month-to-month growth, indicating a gradual recovery of the housing market after the Great Recession.
For details, see https://fred.stlouisfed.org/categories/32302
ECONOMIC INDICATORS – View all economic indicators (CBER Data Center).
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