Stagnation, Employment, and Income Distribution

Abstract

This chapter discusses a major economic problem facing modern policy. The economy’s performance in terms of growth and job creation has tapered off compared to mid-20th century results. Evidence is provided that suggest a possible stagnation tendency gripping the economy. The chapter lays out various ideas about why this may be true, and highlights the issue of employment and income distribution. The chapter discusses how policymakers may respond to the economic stagnation challenge and identifies four basic responses policymakers can take. The chapter ends with the claim that the economy’s performance since the early 1990s lies somewhere between robustness and outright stagnation. The political effects of this level of performance are then examined.