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Essay text:
This public debate has taken for granted that inequality in these countries has risen as a result of globalisation.
But has it really? In a recent paper*, co-authored with John Romalis from the University of Chicago, I argue that it has not. The reason is simple. How rich you are depends on two things: how much money you have, and how much the goods you buy cost. If your income doubles but the prices of the goods you consume also doubles, you are no better off. Unfortunately the conventional wisdom on US inequality is based on official measures that look only at the first half, the income differential...
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