Earnings of the average US workers with an undergraduate degree have not kept up with gains in productivity in recent decades, according to research by academics at MIT that challenges traditional explanations of why income inequality is rising.

The findings, which will be presented to the New America Foundation today, come amid widespread unease about the sluggish trend in middle class income growth, both in ab-solute terms and relative to the new superstar class of chief executives, hedge fund managers and other financiers.

While in the short term labour market conditions are now good for most US workers, the state of the "American dream" is already emerging as a big theme in the run-up to the 2008 presidential election...

The Massachusetts Institute of Technology economists, Frank Levy and Peter Temin, repeat earlier findings that the gap between the earnings of the average university graduate and high school graduate - which was stable for much of the 1960s and 1970s - expanded relentlessly from 1980 to 2000, before slowing a little in recent years...

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For more information on New America's event, please click here.