When it comes to the economy, it's often said that “a rising tide lifts all boats.” Yet most economists have been confounded by the failure of recent productivity gains to significantly raise the incomes for the majority of American workers.

At this special event, a presentation of the Next Social Contract Initiative at the New America Foundation, MIT economists Frank Levy and Peter Temin presented their new paper “Inequality and Institutions in 20th Century America,” which explores the dynamics of widening income inequality in the second half of the twentieth century. Based on groundbreaking research, they propose a novel history of inequality which focuses on how economic outcomes are shaped by the interplay of economic institutions. Their argument takes into account a range of policy levers, as they consider how the changing influence of collective bargaining, wage policy, and taxation tipped the balance of compensation in the U.S. economy in a manner that severs the traditional relationship between productivity gains and widespread wage increases. Following their presentation, Maya MacGuineas of the New America Foundation offered her own perspective on the factors contributing to these trends, and Reid Cramer, co-director of the Next Social Contract Initiative, moderated a lively Q&A.

Video of this event is available at right, while an MP3 audio recording can be downloaded below.

About The Next Social Contract Initiative: Through a program of research, analysis, and public education, the Next Social Contract Initiative is focused on understanding how the American social contract has evolved, why it fails to meet our needs today, and how we can reconstruct it for the contemporary economic conditions and an increasingly diverse society.