Economic inequality

From Wikipedia, the free encyclopedia
Jump to navigation Jump to search
For the economic inequality among countries, see international inequality.
See also: Social inequality and Social apartheid

Economic inequality is the difference found in various measures of economic well-being among individuals in a group, among groups in a population, or among countries. Economic inequality sometimes refers to income inequality, wealth inequality, or the wealth gap. Economists generally focus on economic disparity in three metrics: wealth, income, and consumption,[1] the issue of economic inequality is relevant to notions of equity, equality of outcome, and equality of opportunity.[2]

Economic inequality varies between societies, historical periods, economic structures and systems, the term can refer to cross-sectional distribution of income or wealth at any particular period, or to changes of income and wealth over longer periods of time.[3] There are various numerical indices for measuring economic inequality. A widely used index is the Gini coefficient, but there are also many other methods.

Research suggests that greater inequality hinders the duration of growth but not its rate.[4][5] Whereas globalization has reduced global inequality (between nations), it has increased inequality within nations.[6]

Differences in national income equality around the world as measured by the national Gini coefficient. The Gini coefficient is a number between 0 and 1, where 0 corresponds with perfect equality (where everyone has the same income) and 1 corresponds with absolute inequality (where one person has all the income, and everyone else has zero income).

Empirical measurements of inequality[edit]

The first set of income distribution statistics for the United States covering the period from (1913–48) was published in 1952 by Simon Kuznets, Shares of Upper Income Groups in Income and Savings. It relied on US federal income tax returns and Kuznets's own estimates of US national income, National Income: A Summary of Findings (1946).[7] Others who contributed to development of accurate income distribution statistics during the early 20th century were John Whitefield Kendrick in the United States, Arthur Bowley and Colin Clark in the UK, and L. Dugé de Bernonville in France.[8]

Economists generally consider three metrics of economic dispersion: wealth, income, and consumption.[1] A skilled professional may have low wealth and low income as student, low wealth and high earnings in the beginning of the career, and high wealth and low earnings after the career. People's preferences determine whether they consume earnings immediately or defer consumption to the future, the distinction is also important at the level of economy:

  • There are economies with high income inequality and relatively low wealth inequality (such as Japan and Italy).[1]
  • There are economies with relatively low income inequality and high wealth inequality (such as Switzerland and Denmark).[1]

There are different ways to measure income inequality and wealth inequality. Different choices lead to different results, the Organisation for Economic Co-operation and Development (OECD) provides data on the following eight types of income inequality:[9]

  • Dispersion of hourly wages among full-time (or full-time equivalent) workers
  • Wage dispersion among workers – E.g. annual wages, including wages from part-time work or work during only part of the year.
  • Individual earnings inequality among all workers – Includes the self-employed.
  • Individual earnings inequality among the entire working-age population – Includes those who are inactive, e.g. students, unemployed, early pensioners, etc.
  • Household earnings inequality – Includes the earnings of all household members.
  • Household market income inequality – Includes incomes from capital, savings and private transfers.
  • Household disposable income inequality – Includes public cash transfers received and direct taxes paid.
  • Household adjusted disposable income inequality – Includes publicly provided services.

There are many challenges in comparing data between economies, or in a single economy in different years. Examples of challenges include:

  • Data can be based on joint taxation of couples (e.g. France, Germany, Ireland, Netherlands, Portugal and Switzerland) or individual taxation (e.g. Australia, Canada, Italy, Japan, New Zealand, Spain, the UK).[9]
  • The tax authorities generally only collect information on income that is potentially taxable.[9]
  • The precise definition of gross income varies from country to country. There are differences when it comes to inclusion of pension entitlements and other savings, and benefits such as employer provided health insurance.[9]
  • Differences when it comes under-declaration of income and/or wealth in tax filings.[9]
  • A special event like an exit from business may lead to a very high income in one year, but much lower income in other years of the person's lifetime.[9]
  • Much income and wealth in non-western countries is obtained or held extra-legally through black market and underground activities such as unregistered businesses, informal property ownership arrangements, etc.[10]

Measurements[edit]

Share of income of the top 1% for selected developed countries, 1975 to 2015

In 1820, the ratio between the income of the top and bottom 20 percent of the world's population was three to one. By 1991, it was eighty-six to one.[11] A 2011 study titled "Divided we Stand: Why Inequality Keeps Rising" by the Organisation for Economic Co-operation and Development (OECD) sought to explain the causes for this rising inequality by investigating economic inequality in OECD countries; it concluded that following factors had a role:[12]

  • Changes in the structure of households can play an important role. Single-headed households in OECD countries have risen from an average of 15% in the late 1980s to 20% in the mid-2000s, resulting in higher inequality.
  • Assortative mating refers to the phenomenon of people marrying people with similar background, for example doctors marrying doctors rather than nurses. OECD found out that 40% of couples where both partners work belonged to the same or neighbouring earnings deciles compared with 33% some 20 years before.[9]
  • In the bottom percentiles number of hours worked has decreased.[9]
  • The main reason for increasing inequality seems to be the difference between the demand for and supply of skills.[9]
  • Income inequality in OECD countries is at its highest level for the past half century. The ratio between the bottom 10% and the top 10% has increased from 1:7, to 1:9 in 25 years.[9]
  • There are tentative signs of a possible convergence of inequality levels towards a common and higher average level across OECD countries.[9]
  • With very few exceptions (France, Japan, and Spain), the wages of the 10% best-paid workers have risen relative to those of the 10% lowest paid.[9]

A 2011 OECD study investigated economic inequality in Argentina, Brazil, China, India, Indonesia, Russia and South Africa. It concluded that key sources of inequality in these countries include "a large, persistent informal sector, widespread regional divides (e.g. urban-rural), gaps in access to education, and barriers to employment and career progression for women."[9]

A study by the World Institute for Development Economics Research at United Nations University reports that the richest 1% of adults alone owned 40% of global assets in the year 2000, the three richest people in the world possess more financial assets than the lowest 48 nations combined.[13] The combined wealth of the "10 million dollar millionaires" grew to nearly $41 trillion in 2008.[14] A January 2014 report by Oxfam claims that the 85 wealthiest individuals in the world have a combined wealth equal to that of the bottom 50% of the world's population, or about 3.5 billion people.[15][16][17][18][19] According to a Los Angeles Times analysis of the report, the wealthiest 1% owns 46% of the world's wealth; the 85 richest people, a small part of the wealthiest 1%, own about 0.7% of the human population's wealth, which is the same as the bottom half of the population.[20] More recently, in January 2015, Oxfam reported that the wealthiest 1 percent will own more than half of the global wealth by 2016.[21][22] An October 2014 study by Credit Suisse also claims that the top 1% now own nearly half of the world's wealth and that the accelerating disparity could trigger a recession;[23] in October 2015, Credit Suisse published a study which shows global inequality continues to increase, and that half of the world's wealth is now in the hands of those in the top percentile, whose assets each exceed $759,900.[24] A 2016 report by Oxfam claims that the 62 wealthiest individuals own as much wealth as the poorer half of the global population combined.[25] Oxfam's claims have however been questioned on the basis of the methodology used: by using net wealth (adding up assets and subtracting debts), the Oxfam report, for instance, finds that there are more poor people in the United States and Western Europe than in China (due to a greater tendency to take on debts).[26][27][28][unreliable source?][29][30][unreliable source?] Anthony Shorrocks, the lead author of the Credit Suisse report which is one of the sources of Oxfam's data, considers the criticism about debt to be a "silly argument" and "a non-issue . . . a diversion."[27] Oxfam's 2017 report says the top eight billionaires have as much wealth as the bottom half of the global population, and that rising inequality is suppressing wages, as businesses are focused on delivering higher returns to wealthy owners and executives;[31] in 2018, the Oxfam report said that the wealth gap continued to widen in 2017, with 82% of global wealth generated going to the wealthiest 1%.[32]

According to PolitiFact the top 400 richest Americans "have more wealth than half of all Americans combined."[33][34][35][36] According to the New York Times on July 22, 2014, the "richest 1 percent in the United States now own more wealth than the bottom 90 percent".[19] Inherited wealth may help explain why many Americans who have become rich may have had a "substantial head start".[37][38] In September 2012, according to the Institute for Policy Studies (IPS), "over 60 percent" of the Forbes richest 400 Americans "grew up in substantial privilege".[39] A 2017 report by the IPS said that three individuals, Jeff Bezos, Bill Gates and Warren Buffett, own as much wealth as the bottom half of the population, or 160 million people, and that the growing disparity between the wealthy and the poor has created a "moral crisis", noting that "we have not witnessed such extreme levels of concentrated wealth and power since the first gilded age a century ago."[40][41] In 2016, the world's billionaires increased their combined global wealth to a record $6 trillion.[42]

The existing data and estimates suggest a large increase in international (and more generally inter-macroregional) component between 1820 and 1960, it might have slightly decreased since that time at the expense of increasing inequality within countries.[43]

The United Nations Development Programme in 2014 asserted that greater investments in social security, jobs and laws that protect vulnerable populations are necessary to prevent widening income inequality....[44]

There is a significant difference in the measured wealth distribution and the public's understanding of wealth distribution. Michael Norton of the Harvard Business School and Dan Ariely of the Department of Psychology at Duke University found this to be true in their research, done in 2011, the actual wealth going to the top quintile in 2011 was around 84% where as the average amount of wealth that the general public estimated to go to the top quintile was around 58%.[45]

Two researchers claim that global income inequality is decreasing, due to strong economic growth in developing countries.[46] However, the OECD reported in 2015 that income inequality is higher than it has ever been within OECD member nations and is at increased levels in many emerging economies.[47] According to a June 2015 report by the International Monetary Fund:

Widening income inequality is the defining challenge of our time; in advanced economies, the gap between the rich and poor is at its highest level in decades. Inequality trends have been more mixed in emerging markets and developing countries (EMDCs), with some countries experiencing declining inequality, but pervasive inequities in access to education, health care, and finance remain.[48]

In October 2017, the IMF warned that inequality within nations, in spite of global inequality falling in recent decades, has risen so sharply that it threatens economic growth and could result in further political polarization, the Fund's Fiscal Monitor report said that "progressive taxation and transfers are key components of efficient fiscal redistribution."[49]

Wealth distribution within individual countries[edit]

Main article: List of countries by distribution of wealth

The following table shows information about wealth distribution in different countries, from a 2013 report by Crédit Suisse. Wealth can be negative for people who are in debt, and if there are enough people in debt in a country, the Gini coefficient can be greater than 100%, as seen in the case of Denmark, the Gini coefficients for wealth are often much higher than those for income. This is the case for example in Scandinavian countries such as Sweden and Finland, for example, in Sweden about 24% of households have negative wealth (or zero). This seems to be due to factors such as social insurance programmes (welfare) and the public pension scheme.[50]

Income distribution within individual countries[edit]

Countries' income inequality according to their most recent reported Gini index values (often 10+ years old) as of 2014:
red = high, green = low inequality
Main article: List of countries by income equality

A Gini index value above 50 is considered high; countries including Brazil, Colombia, South Africa, Botswana, and Honduras can be found in this category. A Gini index value of 30 or above is considered medium; countries including Vietnam, Mexico, Poland, The United States, Argentina, Russia and Uruguay can be found in this category. A Gini index value lower than 30 is considered low; countries including Austria, Germany, Denmark, Slovenia, Sweden and Ukraine can be found in this category.[52]

Causes[edit]

There are various reasons for economic inequality within societies. Recent growth in overall income inequality, at least within the OECD countries, has been driven mostly by increasing inequality in wages and salaries.[12]

Economist Thomas Piketty argues that widening economic disparity is an inevitable phenomenon of free market capitalism when the rate of return of capital (r) is greater than the rate of growth of the economy (g).[53]

Common factors thought to impact economic inequality include:

  • labor market outcomes[12]
  • globalization, by:
    • suppressing wages in low-skill jobs due to a surplus of low-skill labor in developing countries
    • increasing the market size and the rewards for people and firms succeeding in a particular niche
    • providing more investment opportunities for already-wealthy people[citation needed]
    • increasing international influence [2]
    • decreasing domestic influence [3]
  • policy reforms[12]
  • extra-legal ownership of property (real estate and business)[10]
  • more regressive taxation[54]
  • plutocracy
  • computerization, automation and increased technology, which means more skills are required to obtain a moderate or high wage
  • ethnic discrimination[55]
  • gender discrimination[56]
  • nepotism[57]
  • variation in natural ability[58]
  • neoliberalism[59]
  • Growing acceptance of very high CEO salaries, e.g. in the United States since the 1960s[60]
  • Land speculation – Followers of Henry George believe that landlords and land speculators derive excess wealth and income from the tendency of land to increase exponentially with development and at a much higher rate than population growth. Their solution is to tax land value, though not necessarily structures or other improvements, this concept is known as Georgism.

Theoretical frameworks[edit]

Neoclassical economics[edit]

Neoclassical economics views inequalities in the distribution of income as arising from differences in value added by labor, capital and land. Within labor income distribution is due to differences in value added by different classifications of workers; in this perspective, wages and profits are determined by the marginal value added of each economic actor (worker, capitalist/business owner, landlord).[61] Thus, in a market economy, inequality is a reflection of the productivity gap between highly-paid professions and lower-paid professions.[62]

Marxian economics[edit]

Marxian economics attributes rising inequality to job automation and capital deepening within capitalism. The process of job automation conflicts with the capitalist property form and its attendant system of wage labor.

In Marxian analysis, capitalist firms increasingly substitute capital equipment for labor inputs (workers) under competitive pressure to reduce costs and maximize profits, over the long-term, this trend increases the organic composition of capital, meaning that less workers are required in proportion to capital inputs, increasing unemployment (the "reserve army of labour"). This process exerts a downward pressure on wages, the substitution of capital equipment for labor (mechanization and automation) raises the productivity of each worker, resulting in a situation of relatively stagnant wages for the working class amidst rising levels of property income for the capitalist class.[63]

Labour market[edit]

A major cause of economic inequality within modern market economies is the determination of wages by the market. Where competition is imperfect; information unevenly distributed; opportunities to acquire education and skills unequal market failure results. Since many such imperfect conditions exist in virtually every market, there is in fact little presumption that markets are in general efficient, this means that there is an enormous potential role for government to correct such market failures.[64]

In a purely capitalist mode of production (i.e. where professional and labor organizations cannot limit the number of workers) the workers wages will not be controlled by these organizations, or by the employer, but rather by the market. Wages work in the same way as prices for any other good. Thus, wages can be considered as a function of market price of skill. And therefore, inequality is driven by this price. Under the law of supply and demand, the price of skill is determined by a race between the demand for the skilled worker and the supply of the skilled worker. "On the other hand, markets can also concentrate wealth, pass environmental costs on to society, and abuse workers and consumers." "Markets, by themselves, even when they are stable, often lead to high levels of inequality, outcomes that are widely viewed as unfair."[65] Employers who offer a below market wage will find that their business is chronically understaffed, their competitors will take advantage of the situation by offering a higher wage the best of their labor. For a businessman who has the profit motive as the prime interest, it is a losing proposition to offer below or above market wages to workers.[66]

A job where there are many workers willing to work a large amount of time (high supply) competing for a job that few require (low demand) will result in a low wage for that job, this is because competition between workers drives down the wage. An example of this would be jobs such as dish-washing or customer service. Competition amongst workers tends to drive down wages due to the expendable nature of the worker in relation to his or her particular job. A job where there are few able or willing workers (low supply), but a large need for the positions (high demand), will result in high wages for that job, this is because competition between employers for employees will drive up the wage. Examples of this would include jobs that require highly developed skills, rare abilities, or a high level of risk. Competition amongst employers tends to drive up wages due to the nature of the job, since there is a relative shortage of workers for the particular position. Professional and labor organizations may limit the supply of workers which results in higher demand and greater incomes for members. Members may also receive higher wages through collective bargaining, political influence, or corruption.[67]

These supply and demand interactions result in a gradation of wage levels within society that significantly influence economic inequality. Polarization of wages does not explain the accumulation of wealth and very high incomes among the 1%. Joseph Stiglitz believes that "It is plain that markets must be tamed and tempered to make sure they work to the benefit of most citizens."[68]

On the other hand, higher economic inequality tends to increase entrepreneurship rates at the individual level (self-employment). However, most of it is often based on necessity rather than opportunity. Necessity-based entrepreneurship is motivated by survival needs such as income for food and shelter ("push" motivations), whereas opportunity-based entrepreneurship is driven by achievement-oriented motivations ("pull") such as vocation and more likely to involve the pursue of new products, services, or underserved market needs, the economic impact of the former type of entrepreneurialism tends to be redistributive while the latter is expected to foster technological progress and thus have a more positive impact on economic growth.[69]

Taxes[edit]

Another cause is the rate at which income is taxed coupled with the progressivity of the tax system. A progressive tax is a tax by which the tax rate increases as the taxable base amount increases.[70][71][72][73][74] In a progressive tax system, the level of the top tax rate will often have a direct impact on the level of inequality within a society, either increasing it or decreasing it, provided that income does not change as a result of the change in tax regime. Additionally, steeper tax progressivity applied to social spending can result in a more equal distribution of income across the board.[75] The difference between the Gini index for an income distribution before taxation and the Gini index after taxation is an indicator for the effects of such taxation.[76]

There is debate between politicians and economists over the role of tax policy in mitigating or exacerbating wealth inequality. Economists such as Paul Krugman, Peter Orszag, and Emmanuel Saez have argued that tax policy in the post World War II era has indeed increased income inequality by enabling the wealthiest Americans far greater access to capital than lower-income ones.[54]

A paper by economists Annette Alstadsæter, Niels Johannesen and Gabriel Zucman, which used data from HSBC Switzerland ("Swiss leaks") and Mossack Fonseca ("Panama Papers"), found that "on average about 3% of personal taxes are evaded in Scandinavia, but this figure rises to about 30% in the top 0.01% of the wealth distribution... Taking tax evasion into account increases the rise in inequality seen in tax data since the 1970s markedly, highlighting the need to move beyond tax data to capture income and wealth at the top, even in countries where tax compliance is generally high. We also find that after reducing tax evasion—by using tax amnesties—tax evaders do not legally avoid taxes more, this result suggests that fighting tax evasion can be an effective way to collect more tax revenue from the ultra-wealthy."[77]

In its October 2017 report, the International Monetary Fund argued that increasing taxes on the top 1% of income earners would reduce economic inequality without hindering economic growth.[78]

Education[edit]

Illustration from a 1916 advertisement for a vocational school in the back of a US magazine. Education has been seen as a key to higher income, and this advertisement appealed to Americans' belief in the possibility of self-betterment, as well as threatening the consequences of downward mobility in the great income inequality existing during the Industrial Revolution.

An important factor in the creation of inequality is variation in individuals' access to education.[79] Education, especially in an area where there is a high demand for workers, creates high wages for those with this education,[80] however, increases in education first increase and then decrease growth as well as income inequality. As a result, those who are unable to afford an education, or choose not to pursue optional education, generally receive much lower wages, the justification for this is that a lack of education leads directly to lower incomes, and thus lower aggregate savings and investment. Conversely, education raises incomes and promotes growth because it helps to unleash the productive potential of the poor.

In 2014, economists with the Standard & Poor's rating agency concluded that the widening disparity between the U.S.'s wealthiest citizens and the rest of the nation had slowed its recovery from the 2008–09 recession and made it more prone to boom-and-bust cycles. To partially remedy the wealth gap and the resulting slow growth, S&P recommended increasing access to education. It estimated that if the average United States worker had completed just one more year of school, it would add an additional $105 billion in growth to the country's economy over five years.[81]

During the mass high school education movement from 1910–40, there was an increase in skilled workers, which led to a decrease in the price of skilled labor. High school education during the period was designed to equip students with necessary skill sets to be able to perform at work; in fact, it differs from the present high school education, which is regarded as a stepping-stone to acquire college and advanced degrees. This decrease in wages caused a period of compression and decreased inequality between skilled and unskilled workers. Education is very important for the growth of the economy, however educational inequality in gender also influence towards the economy. Lagerlof and Galor stated that gender inequality in education can result to low economic growth, and continued gender inequality in education, thus creating a poverty trap, it is suggested that a large gap in male and female education may indicate backwardness and so may be associated with lower economic growth, which can explain why there is economic inequality between countries.

More of Barro studies also find that female secondary education is positively associated with growth, his findings show that countries with low female education; increasing it has little effect on economic growth, however in countries with high female education, increasing it significantly boosts economic growth. More and better education is a prerequisite for rapid economic development around the world. Education stimulates economic growth and improves people's lives through many channels.

By increasing the efficiency of the labour force it create better conditions for good governance, improving health and enhancing equality. Labor market success is linked to schooling achievement, the consequences of widening disparities in schooling is likely to be further increases in earnings inequality

The United States funds education through property taxes, which can lead to large discrepancies in the amount of funding a public school may receive. Often, but not always, this results in more funding for schools attended by children from wealthier parents,[82] as of 2015 the United States, Israel, and Turkey are the only three OECD countries where the government spends more on schools in rich neighborhoods than in poor neighborhoods.[83][84]

Economic liberalism, deregulation and decline of unions[edit]

John Schmitt and Ben Zipperer (2006) of the CEPR point to economic liberalism and the reduction of business regulation along with the decline of union membership as one of the causes of economic inequality. In an analysis of the effects of intensive Anglo-American liberal policies in comparison to continental European liberalism, where unions have remained strong, they concluded "The U.S. economic and social model is associated with substantial levels of social exclusion, including high levels of income inequality, high relative and absolute poverty rates, poor and unequal educational outcomes, poor health outcomes, and high rates of crime and incarceration. At the same time, the available evidence provides little support for the view that U.S.-style labor market flexibility dramatically improves labor-market outcomes. Despite popular prejudices to the contrary, the U.S. economy consistently affords a lower level of economic mobility than all the continental European countries for which data is available."[85]

Sociologist Jake Rosenfield of the University of Washington argues that the decline of organized labor in the United States has played a more significant role in expanding the income gap than technological changes and globalization, which were also experienced by other industrialized nations that didn't experience steep surges in inequality, he points out that nations with high rates of unionization, particularly in Scandinavia, have very low levels of inequality, and concludes "the historical pattern is clear; the cross-national pattern is clear: high inequality goes hand-in-hand with weak labor movements and vice-versa."[86]

A 2015 study by the International Monetary Fund found that the decline of unionization in many advanced economies starting in the 1980s has fueled rising income inequality.[87][88]

In 2016, researchers at the IMF concluded that neoliberal policies imposed by economic elites have exacerbated inequality to such an extent that it is slowing economic growth and "jeopardizing durable expansion." Their report highlights "three disquieting conclusions":

  • The benefits in terms of increased growth seem fairly difficult to establish when looking at a broad group of countries.
  • The costs in terms of increased inequality are prominent. Such costs epitomize the trade-off between the growth and equity effects of some aspects of the neoliberal agenda.
  • Increased inequality in turn hurts the level and sustainability of growth. Even if growth is the sole or main purpose of the neoliberal agenda, advocates of that agenda still need to pay attention to the distributional effects.[89]

On the other hand, Jonathan Rothwell notes that studying the "increase in the income share of the top 1 percent" in countries in the OECD between 1980 and 2014 finds "no correlation across countries" between the change in inequality and change in labor's share of GDP. Both inequality and labor's share of GDP have risen in the UK, while in the Netherlands labor's share has fallen and inequality is unchanged.[90]

Information technology[edit]

The growth in importance of information technology has been credited with increasing income inequality.[91] Technology has been called "the main driver of the recent increases in inequality" by Erik Brynjolfsson, of MIT;[92] in arguing against this explanation, Jonathan Rothwell notes that if technological advancement is measured by high rates of invention, there is a negative correlation between it and inequality. Countries with high invention rates — "as measured by patent applications filed under the Patent Cooperation Treaty" — exhibit lower inequality than those with less. In one country, the United States, "salaries of engineers and software developers rarely reach" above $390,000/year (the lower limit for the top 1% earners).[90]

Globalization[edit]

Change in real income between 1988 and 2008 at various income percentiles of global income distribution.[93]

Trade liberalization may shift economic inequality from a global to a domestic scale.[94] When rich countries trade with poor countries, the low-skilled workers in the rich countries may see reduced wages as a result of the competition, while low-skilled workers in the poor countries may see increased wages. Trade economist Paul Krugman estimates that trade liberalisation has had a measurable effect on the rising inequality in the United States. He attributes this trend to increased trade with poor countries and the fragmentation of the means of production, resulting in low skilled jobs becoming more tradeable. However, he concedes that the effect of trade on inequality in America is minor when compared to other causes, such as technological innovation, a view shared by other experts. Empirical economists Max Roser and Jesus Crespo-Cuaresma find support in the data that international trade is increasing income inequality, they empirically confirm the predictions of the Stolper–Samuelson theorem regarding the effects of international trade on the distribution of incomes.[95] Lawrence Katz estimates that trade has only accounted for 5-15% of rising income inequality. Robert Lawrence argues that technological innovation and automation has meant that low-skilled jobs have been replaced by machine labor in wealthier nations, and that wealthier countries no longer have significant numbers of low-skilled manufacturing workers that could be affected by competition from poor countries.[94]

Economist Branko Milanovic analyzed global income inequality, comparing 1988 and 2008, his analysis indicated that the global top 1% and the middle classes of the emerging economies (e.g., China, India, Indonesia, Brazil and Egypt) were the main winners of globalization during that time. The real (inflation adjusted) income of the global top 1% increased approximately 60%, while the middle classes of the emerging economies (those around the 50th percentile of the global income distribution in 1988) rose 70-80%, on the other hand, those in the middle class of the developed world (those in the 75th to 90th percentile in 1988, such as the American middle class) experienced little real income gains. The richest 1% contains 60 million persons globally, including 30 million Americans (i.e., the top 12% of Americans by income were in the global top 1% in 2008).[93][96]

Jonathan Rothwell argues that there is a negative not a positive correlation between trade and inequality when different countries are compared. Trade makes up a relatively small part of the relatively unequal US economy, while Denmark and the Netherlands have high levels of both equality and dependence on imports.[90]

Gender[edit]

The gender gap in median earnings of full-time employees according to the OECD 2015[97]

In many countries, there is a gender pay gap in favor of males in the labor market. Several factors other than discrimination may contribute to this gap, on average, women are more likely than men to consider factors other than pay when looking for work, and may be less willing to travel or relocate.[98][99] Thomas Sowell, in his book Knowledge and Decisions, claims that this difference is due to women not taking jobs due to marriage or pregnancy, but income studies show that that does not explain the entire difference. A U.S. Census's report stated that in US once other factors are accounted for there is still a difference in earnings between women and men,[100] the income gap in other countries ranges from 53% in Botswana to -40% in Bahrain.[101]

Gender inequality and discrimination is argued to cause and perpetuate poverty and vulnerability in society as a whole. Gender Equity Indices seek to provide the tools to demonstrate this feature of equity.[102]

19th century socialists like Robert Owen, William Thompson, Anna Wheeler and August Bebel argued that the economic inequality between genders was the leading cause of economic inequality; however Karl Marx and Fredrick Engels believed that the inequality between social classes was the larger cause of inequality.[103]

Economic development[edit]

A Kuznets curve
Main article: Kuznets curve

Economist Simon Kuznets argued that levels of economic inequality are in large part the result of stages of development. According to Kuznets, countries with low levels of development have relatively equal distributions of wealth, as a country develops, it acquires more capital, which leads to the owners of this capital having more wealth and income and introducing inequality. Eventually, through various possible redistribution mechanisms such as social welfare programs, more developed countries move back to lower levels of inequality.

Plotting the relationship between level of income and inequality, Kuznets saw middle-income developing economies level of inequality bulging out to form what is now known as the Kuznets curve. Kuznets demonstrated this relationship using cross-sectional data. However, more recent testing of this theory with superior panel data has shown it to be very weak. Kuznets' curve predicts that income inequality will eventually decrease given time, as an example, income inequality did fall in the United States during its High school movement from 1910 to 1940 and thereafter.[citation needed] However, recent data shows that the level of income inequality began to rise after the 1970s, this does not necessarily disprove Kuznets' theory.[citation needed] It may be possible that another Kuznets' cycle is occurring, specifically the move from the manufacturing sector to the service sector.[citation needed] This implies that it may be possible for multiple Kuznets' cycles to be in effect at any given time.

Individual preferences[edit]

Related to cultural issues, diversity of preferences within a society may contribute to economic inequality. When faced with the choice between working harder to earn more money or enjoying more leisure time, equally capable individuals with identical earning potential may choose different strategies.[citation needed] The trade-off between work and leisure is particularly important in the supply side of the labor market in labor economics.[citation needed]

Likewise, individuals in a society often have different levels of risk aversion. When equally-able individuals undertake risky activities with the potential of large payoffs, such as starting new businesses, some ventures succeed and some fail, the presence of both successful and unsuccessful ventures in a society results in economic inequality even when all individuals are identical.[104]

Wealth concentration[edit]

Main articles: Wealth concentration and Billionaire
Jeff Bezos is officially the richest man in the world.

Wealth concentration is the process by which, under certain conditions, newly created wealth concentrates in the possession of already-wealthy individuals or entities. Accordingly, those who already hold wealth have the means to invest in new sources of creating wealth or to otherwise leverage the accumulation of wealth, thus are the beneficiaries of the new wealth, over time, wealth condensation can significantly contribute to the persistence of inequality within society. Thomas Piketty in his book Capital in the Twenty-First Century argues that the fundamental force for divergence is the usually greater return of capital (r) than economic growth (g), and that larger fortunes generate higher returns.[105]

As of 2017, there were 2,754 U.S. dollar billionaires worldwide, with a combined wealth of over US$9.2 trillion,[106] up from US$2.4 trillion in 2009.[107]

Rent seeking[edit]

Economist Joseph Stiglitz argues that rather than explaining concentrations of wealth and income, market forces should serve as a brake on such concentration, which may better be explained by the non-market force known as "rent-seeking". While the market will bid up compensation for rare and desired skills to reward wealth creation, greater productivity, etc., it will also prevent successful entrepreneurs from earning excess profits by fostering competition to cut prices, profits and large compensation.[108] A better explainer of growing inequality, according to Stiglitz, is the use of political power generated by wealth by certain groups to shape government policies financially beneficial to them. This process, known to economists as rent-seeking, brings income not from creation of wealth but from "grabbing a larger share of the wealth that would otherwise have been produced without their effort"[109]

Rent seeking is often thought to be the province of societies with weak institutions and weak rule of law, but Stiglitz believes there is no shortage of it in developed societies such as the United States. Examples of rent seeking leading to inequality include:

Since rent seeking aims to "pluck the goose to obtain the largest amount of feathers with the least possible amount of hissing" – it is by nature obscure, avoiding public spotlight in legal fine print, or camouflaged its extraction with widely accepted rationalizations (markets are naturally competitive and so need no government regulation against monopolies[115]).

Jonathan Rothwell also argues for rent seeking at least in the form of "regulatory barriers that shelter" the sectors of "professional services, finance and insurance, and health care" from competition are a major source of the growth in inequality, at least in the US.[90]

Finance industry[edit]

Jamie Galbraith argues that countries with larger financial sectors have greater inequality, and the link is not an accident.[116][117]

Effects[edit]

Buildings in Rio de Janeiro, demonstrating economic inequality

Effects of inequality researchers have found include higher rates of health and social problems, and lower rates of social goods,[118] a lower level of economic utility in society from resources devoted on high-end consumption,[119][not in citation given] and even a lower level of economic growth when human capital is neglected for high-end consumption.[120] For the top 21 industrialised countries, counting each person equally, life expectancy is lower in more unequal countries (r = -.907).[121] A similar relationship exists among US states (r = -.620).[122]

2013 Economics Nobel prize winner Robert J. Shiller said that rising inequality in the United States and elsewhere is the most important problem.[123]

Increasing inequality harms economic growth.[124]

The economic stratification of society into "elites" and "masses" played a central role in the collapse of other advanced civilizations such as the Roman, Han and Gupta empires.[125]

Creation of the welfare state[edit]

Some, such as Alberto Alesina and Dani Rodrik, argue that economic inequality creates demand for redistribution and the creation of welfare states.[126] A 2014 study questions this relationship, finding that "inequality did not favour the development of social policy between 1880 and 1930, on the contrary, social policy developed more easily in countries that were previously more egalitarian, suggesting that unequal societies were in a sort of inequality trap, where inequality itself was an obstacle to redistribution."[127]

Democracy[edit]

A 2016 study "The scientific limits of understanding the (potential) relationship between complex social phenomena: the case of democracy and inequality" argues that researchers face fundamental limitations in assessing how democracy and inequality may be related and that these limitations are in large part unrecognised among existing studies that largely produce conflicting results and hypotheses about this potential relationship. The possibility of a ‘causal’ relationship between democracy and inequality remains unknown “given reasons such as their highly complex and idiosyncratic characteristics, fundamental econometric constraints and analysis at the macro-level” – with researchers confined to studying basic correlations between these two phenomena.[128] According to a 2017 review study in the Annual Review of Political Science by Stanford University political scientist Kenneth Scheve and New York University political scientist David Stasavage, "the simple conjectures that democracy produces wealth equality and that wealth inequality leads to democratic failure are not supported by the evidence."[129]

Health[edit]

British researchers Richard G. Wilkinson and Kate Pickett have found higher rates of health and social problems (obesity, mental illness, homicides, teenage births, incarceration, child conflict, drug use), and lower rates of social goods (life expectancy by country, educational performance, trust among strangers, women's status, social mobility, even numbers of patents issued) in countries and states with higher inequality. Using statistics from 23 developed countries and the 50 states of the US, they found social/health problems lower in countries like Japan and Finland and states like Utah and New Hampshire with high levels of equality, than in countries (US and UK) and states (Mississippi and New York) with large differences in household income.[130][131]

For most of human history higher material living standards – full stomachs, access to clean water and warmth from fuel – led to better health and longer lives,[118] this pattern of higher incomes-longer lives still holds among poorer countries, where life expectancy increases rapidly as per capita income increases, but in recent decades it has slowed down among middle income countries and plateaued among the richest thirty or so countries in the world.[132] Americans live no longer on average (about 77 years in 2004) than Greeks (78 years) or New Zealanders (78), though the USA has a higher GDP per capita. Life expectancy in Sweden (80 years) and Japan (82) – where income was more equally distributed – was longer.[133][134]

In recent years the characteristic that has strongly correlated with health in developed countries is income inequality. Creating an index of "Health and Social Problems" from nine factors, authors Richard Wilkinson and Kate Pickett found health and social problems "more common in countries with bigger income inequalities",[135][136] and more common among states in the US with larger income inequalities.[137] Other studies have confirmed this relationship, the UNICEF index of "child well-being in rich countries", studying 40 indicators in 22 countries, correlates with greater equality but not per capita income.[138]

Pickett and Wilkinson argue that inequality and social stratification lead to higher levels of psychosocial stress and status anxiety which can lead to depression, chemical dependency, less community life, parenting problems and stress-related diseases.[139]

In their book, Social Epidemiology, Ichiro Kawachi and S.V. Subramanian found that impoverished individuals simply cannot lead healthy lives as easily as the wealthy. They are unable to secure adequate nutrition for their families, cannot pay utility bills to keep themselves warm during the winter or cold during heat waves, and lack sufficient housing.[140]

National income inequality is positively related to the country's rate of schizophrenia.[141]

Social cohesion[edit]

Further information: Social cohesion
A woman begging in Patras, Greece

Research has shown an inverse link between income inequality and social cohesion; in more equal societies, people are much more likely to trust each other, measures of social capital (the benefits of goodwill, fellowship, mutual sympathy and social connectedness among groups who make up a social units) suggest greater community involvement, and homicide rates are consistently lower.

Comparing results from the question "would others take advantage of you if they got the chance?" in U.S General Social Survey and statistics on income inequality, Eric Uslaner and Mitchell Brown found there is a high correlation between the amount of trust in society and the amount of income equality.[142] A 2008 article by Andersen and Fetner also found a strong relationship between economic inequality within and across countries and tolerance for 35 democracies.

In two studies Robert Putnam established links between social capital and economic inequality, his most important studies[143][144] established these links in both the United States and in Italy. His explanation for this relationship is that

Community and equality are mutually reinforcing... Social capital and economic inequality moved in tandem through most of the twentieth century; in terms of the distribution of wealth and income, America in the 1950s and 1960s was more egalitarian than it had been in more than a century... [T]hose same decades were also the high point of social connectedness and civic engagement. Record highs in equality and social capital coincided. Conversely, the last third of the twentieth century was a time of growing inequality and eroding social capital... The timing of the two trends is striking: somewhere around 1965–70 America reversed course and started becoming both less just economically and less well connected socially and politically.[145]

Albrekt Larsen has advanced this explanation by a comparative study of how trust increased in Denmark and Sweden in the latter part of the 20th century while it decreased in the US and UK, it is argued that inequality levels influence how citizens imagine the trustworthiness of fellow citizens. In this model social trust is not about relations to people you meet (as in Putnam's model) but about people you imagine.[146]

The economist Joseph Stiglitz has argued that economic inequality has led to distrust of business and government.[147]

Crime[edit]

Crime rate has also been shown to be correlated with inequality in society. Most studies looking into the relationship have concentrated on homicides – since homicides are almost identically defined across all nations and jurisdictions. There have been over fifty studies showing tendencies for violence to be more common in societies where income differences are larger. Research has been conducted comparing developed countries with undeveloped countries, as well as studying areas within countries. Daly et al. 2001[148] found that among U.S. states and Canadian provinces there is a tenfold difference in homicide rates related to inequality. They estimated that about half of all variation in homicide rates can be accounted for by differences in the amount of inequality in each province or state. Fajnzylber et al. (2002) found a similar relationship worldwide. Among comments in academic literature on the relationship between homicides and inequality are:

  • The most consistent finding in cross-national research on homicides has been that of a positive association between income inequality and homicides.[149]
  • Economic inequality is positively and significantly related to rates of homicide despite an extensive list of conceptually relevant controls. The fact that this relationship is found with the most recent data and using a different measure of economic inequality from previous research, suggests that the finding is very robust.[150]

A 2016 study, controlling for different factors than previous studies, challenges the aforementioned findings, the study finds "little evidence of a significant empirical link between overall inequality and crime", and that "the previously reported positive correlation between violent crime and economic inequality is largely driven by economic segregation across neighborhoods instead of within-neighborhood inequality".[151]

Social, cultural, and civic participation[edit]

Higher income inequality led to less of all forms of social, cultural, and civic participation among the less wealthy.[152] When inequality is higher the poor do not shift to less expensive forms of participation.[153]

Utility, economic welfare, and distributive efficiency[edit]

Following the utilitarian principle of seeking the greatest good for the greatest number – economic inequality is problematic. A house that provides less utility to a millionaire as a summer home than it would to a homeless family of five, is an example of reduced "distributive efficiency" within society, that decreases marginal utility of wealth and thus the sum total of personal utility. An additional dollar spent by a poor person will go to things providing a great deal of utility to that person, such as basic necessities like food, water, and healthcare; while, an additional dollar spent by a much richer person will very likely go to luxury items providing relatively less utility to that person. Thus, the marginal utility of wealth per person ("the additional dollar") decreases as a person becomes richer. From this standpoint, for any given amount of wealth in society, a society with more equality will have higher aggregate utility, some studies[119][154] have found evidence for this theory, noting that in societies where inequality is lower, population-wide satisfaction and happiness tend to be higher.

Philosopher David Schmidtz argues that maximizing the sum of individual utilities will harm incentives to produce.

A society that takes Joe Rich's second unit [of corn] is taking that unit away from someone who . . . has nothing better to do than plant it and giving it to someone who . . . does have something better to do with it. That sounds good, but in the process, the society takes seed corn out of production and diverts it to food, thereby cannibalizing itself.[155]

However, in addition to the diminishing marginal utility of unequal distribution, Pigou and others point out that a "keeping up with the Joneses" effect among the well off may lead to greater inequality and use of resources for no greater return in utility.

a larger proportion of the satisfaction yielded by the incomes of rich people comes from their relative, rather than from their absolute, amount. This part of it will not be destroyed if the incomes of all rich people are diminished together, the loss of economic welfare suffered by the rich when command over resources is transferred from them to the poor will, therefore, be substantially smaller relatively to the gain of economic welfare to the poor than a consideration of the law of diminishing utility taken by itself suggests.[156]

When the goal is to own the biggest yacht – rather than a boat with certain features – there is no greater benefit from owning 100 metre long boat than a 20 m one as long as it is bigger than your rival. Economist Robert H. Frank compare the situation to that of male elks who use their antlers to spar with other males for mating rights.

The pressure to have bigger ones than your rivals leads to an arms race that consumes resources that could have been used more efficiently for other things, such as fighting off disease, as a result, every male ends up with a cumbersome and expensive pair of antlers, ... and "life is more miserable for bull elk as a group."[157]

Aggregate demand, consumption and debt[edit]

Conservative researchers have argued that income inequality is not significant because consumption, rather than income should be the measure of inequality, and inequality of consumption is less extreme than inequality of income in the US. According to Johnson, Smeeding, and Tory, consumption inequality was actually lower in 2001 than it was in 1986,[158][159] the debate is summarized in "The Hidden Prosperity of the Poor" by journalist Thomas B. Edsall.[160] Other studies have not found consumption inequality less dramatic than household income inequality,[161][162] and the CBO's study found consumption data not "adequately" capturing "consumption by high-income households" as it does their income, though it did agree that household consumption numbers show more equal distribution than household income.[163]

Others dispute the importance of consumption over income, pointing out that if middle and lower income are consuming more than they earn it is because they are saving less or going deeper into debt.[164] Income inequality has been the driving factor in the growing household debt,[161][165] as high earners bid up the price of real estate and middle income earners go deeper into debt trying to maintain what once was a middle class lifestyle.[166]

Central Banking economist Raghuram Rajan argues that "systematic economic inequalities, within the United States and around the world, have created deep financial 'fault lines' that have made [financial] crises more likely to happen than in the past" – the Financial crisis of 2007–08 being the most recent example.[167] To compensate for stagnating and declining purchasing power, political pressure has developed to extend easier credit to the lower and middle income earners – particularly to buy homes – and easier credit in general to keep unemployment rates low, this has given the American economy a tendency to go "from bubble to bubble" fueled by unsustainable monetary stimulation.[168]

Monopolization of labor, consolidation, and competition[edit]

Greater income inequality can lead to monopolization of the labor force, resulting in fewer employers requiring fewer workers.[169][170] Remaining employers can consolidate and take advantage of the relative lack of competition, leading to less consumer choice, market abuses, and relatively higher real prices.[171][170]

Economic incentives[edit]

Some economists believe that one of the main reasons that inequality might induce economic incentive is because material well-being and conspicuous consumption relate to status; in this view, high stratification of income (high inequality) creates high amounts of social stratification, leading to greater competition for status.

One of the first writers to note this relationship, Adam Smith, recognized "regard" as one of the major driving forces behind economic activity, from The Theory of Moral Sentiments in 1759:

[W]hat is the end of avarice and ambition, of the pursuit of wealth, of power, and pre-eminence? Is it to supply the necessities of nature? The wages of the meanest labourer can supply them... [W]hy should those who have been educated in the higher ranks of life, regard it as worse than death, to be reduced to live, even without labour, upon the same simple fare with him, to dwell under the same lowly roof, and to be clothed in the same humble attire? From whence, then, arises that emulation which runs through all the different ranks of men, and what are the advantages which we propose by that great purpose of human life which we call bettering our condition? To be observed, to be attended to, to be taken notice of with sympathy, complacency, and approbation, are all the advantages which we can propose to derive from it. It is the vanity, not the ease, or the pleasure, which interests us.[172]

Modern sociologists and economists such as Juliet Schor and Robert H. Frank have studied the extent to which economic activity is fueled by the ability of consumption to represent social status. Schor, in The Overspent American, argues that the increasing inequality during the 1980s and 1990s strongly accounts for increasing aspirations of income, increased consumption, decreased savings, and increased debt.

In the book Luxury Fever, Robert H. Frank argues that satisfaction with levels of income is much more strongly affected by how someone's income compares with others than its absolute level. Frank gives the example of instructions to a yacht architect by a customer – shipping magnate Stavros Niarchos – to make Niarchos' new yacht 50 feet longer than that of rival magnate Aristotle Onassis. Niarchos did not specify or reportedly even know the exact length of Onassis's yacht.[173][174]

Economic growth[edit]

Main article: Economic growth

Pre-2000 studies[edit]

A 1999 review in the Journal of Economic Literature states high inequality lowers growth, perhaps because it increases social and political instability,[4] the article also says:

Somewhat unusually for the growth literature, studies have tended to concur in finding a negative effect of high inequality on subsequent growth, the evidence has not been accepted by all: some writers point out the concentration of richer countries at the lower end of the inequality spectrum, the poor quality of the distribution data, and the lack of robustness to fixed effects specifications. At least, though, it has become extremely difficult to build a case that inequality is good for growth, this in itself represents a considerable advance. Given the indications that inequality is harmful for growth, attention has moved on to the likely mechanisms.... the literature seems to be moving ... towards an examination of the effects of inequality on fertility rates, investment in education, and political stability.[4]

A 1992 World Bank report published in the Journal of Development Economics said that

Inequality is negatively, and robustly, correlated with growth, this result is not highly dependent upon assumptions about either the form of the growth regression or the measure of inequality...Although statistically significant, the magnitude of the relationship between inequality and growth is relatively small.[175]

NYU economist William Baumol found that substantial inequality does not stimulate growth because poverty reduces labor force productivity.[176] Economists Dierk Herzer and Sebastian Vollmer found that increased income inequality reduces economic growth, but growth itself increases income inequality.[177]

Berg and Ostry of the International Monetary Fund found that of the factors affecting the duration of growth spells (not the rate of growth) in developed and developing countries, income equality is more beneficial than trade openness, sound political institutions, or foreign investment.[178][179]

In 1993, Galor and Zeira showed that inequality in the presence of credit market imperfections has a long lasting detrimental effect on human capital formation and economic development.[180] A 1996 study by Perotti examined the channels through which inequality may affect economic growth, he showed that, in accordance with the credit market imperfection approach, inequality is associated with lower level of human capital formation (education, experience, and apprenticeship) and higher level of fertility, and thereby lower levels of growth. He found that inequality is associated with higher levels of redistributive taxation, which is associated with lower levels of growth from reductions in private savings and investment. Perotti concluded that, "more equal societies have lower fertility rates and higher rates of investment in education. Both are reflected in higher rates of growth. Also, very unequal societies tend to be politically and socially unstable, which is reflected in lower rates of investment and therefore growth."[181]

Research by Harvard economist Robert Barro, found that there is "little overall relation between income inequality and rates of growth and investment". According to work by Barro in 1999 and 2000, high levels of inequality reduce growth in relatively poor countries but encourage growth in richer countries.[182][183] A study of Swedish counties between 1960 and 2000 found a positive impact of inequality on growth with lead times of five years or less, but no correlation after ten years.[184] Studies of larger data sets have found no correlations for any fixed lead time,[185] and a negative impact on the duration of growth.[178]

Some theories developed in the 1970s established possible avenues through which inequality may have a positive effect on economic development.[178][179] According to a 1955 review, savings by the wealthy, if these increase with inequality, were thought to offset reduced consumer demand.[186]

Post-2000 studies[edit]

According to International Monetary Fund economists, inequality in wealth and income is negatively correlated with the duration of economic growth spells (not the rate of growth).[178] High levels of inequality prevent not just economic prosperity, but also the quality of a country's institutions and high levels of education.[187] According to IMF staff economists, "if the income share of the top 20 percent (the rich) increases, then GDP growth actually declines over the medium term, suggesting that the benefits do not trickle down; in contrast, an increase in the income share of the bottom 20 percent (the poor) is associated with higher GDP growth. The poor and the middle class matter the most for growth via a number of interrelated economic, social, and political channels."[188]

However, further work done in 2015 by Sutirtha Bagchia and Jan Svejnar suggests that it is only inequality caused by corruption and cronyism that harms growth. When they control for the fact that some inequality is caused by billionaires using their political connections, then inequality caused by market forces does not seem to have an effect on growth.[189]

Economist Joseph Stiglitz presented evidence in 2009 that both global inequality and inequality within countries prevent growth by limiting aggregate demand.[190] Economist Branko Milanovic, wrote in 2001 that, "The view that income inequality harms growth – or that improved equality can help sustain growth – has become more widely held in recent years. ... The main reason for this shift is the increasing importance of human capital in development. When physical capital mattered most, savings and investments were key. Then it was important to have a large contingent of rich people who could save a greater proportion of their income than the poor and invest it in physical capital, but now that human capital is scarcer than machines, widespread education has become the secret to growth."[120]

Studies on income inequality and growth have sometimes found evidence confirming the Kuznets curve hypothesis, which states that with economic development, inequality first increases, then decreases.[175] Economist Thomas Piketty challenges this notion, claiming that from 1914 to 1945 wars and "violent economic and political shocks" reduced inequality. Moreover, Piketty argues that the "magical" Kuznets curve hypothesis, with its emphasis on the balancing of economic growth in the long run, cannot account for the significant increase in economic inequality throughout the developed world since the 1970s.[191] However, Kristin Forbes found that if country-specific effects were eliminated by using panel estimation, then income inequality does have a significant positive relationship with economic growth, this relationship held across different "samples, variable definitions, and model specifications."[192] Historian Walter Scheidel, who builds on Piketty's thesis that it has been violent shocks that have reduced inequality in The Great Leveler (2017), contends that "the preponderance of the evidence fails to support the idea of a systematic relationship between economic growth and income inequality as first envisioned by Kuznets sixty years ago."[193]

A 2013 report on Nigeria suggests that growth has risen with increased income inequality,[194] some theories popular from the 1950s to 2011 argued that inequality had a positive effect on economic development.[178][179] However, Abhijit Banerjee and Esther Duflo argue that analyses based on comparing yearly equality figures to yearly growth rates were misleading because it takes several years for effects to manifest as changes to economic growth.[185] IMF economists found a strong association between lower levels of inequality in developing countries and sustained periods of economic growth. Developing countries with high inequality have "succeeded in initiating growth at high rates for a few years" but "longer growth spells are robustly associated with more equality in the income distribution."[179]

A 2016 meta-analysis found that "the effect of inequality on growth is negative and more pronounced in less developed countries than in rich countries".[5]

A 2017 study argued that there were both positive and negative effects of inequality: "When inequality is associated with political instability and social unrest, rent seeking and distortive policies, lower capacities for investment in human capital, and a stagnant domestic market, it is mostly expected to harm long-run economic performance, as suggested by many authors. Accordingly, improving income distribution is expected to foster long-run economic growth, especially in low-income countries where the levels of inequality are usually very high. However, some degree of inequality can also be good, as has been theoretically argued in the literature and as empirically suggested in this study. A degree of inequality can play a beneficial role for economic growth when that inequality is driven by market forces and related to hard work and growth-enhancing incentives like risk taking, innovation, capital investment, and agglomeration economies, the challenge for policy makers is to control structural inequality, which reduces the country's capacities for economic development, while at the same time keeping in place those positive incentives that are also necessary for growth."[195]

Mechanisms[edit]

According to economist Branko Milanovic, while traditionally economists thought inequality was good for growth

The view that income inequality harms growth – or that improved equality can help sustain growth – has become more widely held in recent years. ... The main reason for this shift is the increasing importance of human capital in development. When physical capital mattered most, savings and investments were key. Then it was important to have a large contingent of rich people who could save a greater proportion of their income than the poor and invest it in physical capital, but now that human capital is scarcer than machines, widespread education has become the secret to growth.[120]

"Broadly accessible education" is both difficult to achieve when income distribution is uneven and tends to reduce "income gaps between skilled and unskilled labor."

The sovereign-debt economic problems of the late twenty-oughts do not seem to be correlated to redistribution policies in Europe. With the exception of Ireland, the countries at risk of default in 2011 (Greece, Italy, Spain, Portugal) were notable for their high Gini-measured levels of income inequality compared to other European countries, as measured by the Gini index, Greece as of 2008 had more income inequality than the economically healthy Germany.[196]

Equitable growth[edit]

Main article: Inclusive growth

While acknowledging the central role economic growth can potentially play in human development, poverty reduction and the achievement of the Millennium Development Goals, it is becoming widely understood among the development community that special efforts must be made to ensure poorer sections of society are able to participate in economic growth.[197][198][199][200] The effect of economic growth on poverty reduction – the growth elasticity of poverty – can depend on the existing level of inequality,[201][202] for instance, with low inequality a country with a growth rate of 2% per head and 40% of its population living in poverty, can halve poverty in ten years, but a country with high inequality would take nearly 60 years to achieve the same reduction.[203][204] In the words of the Secretary General of the United Nations Ban Ki-Moon: "While economic growth is necessary, it is not sufficient for progress on reducing poverty."[197] Competition policy intending to prevent companies from abusing market power contributes to inclusive growth.[205]

Housing[edit]

See also: Georgism

In many poor and developing countries, much land and housing is held outside the formal or legal property ownership registration system. Much unregistered property is held in informal form through various associations and other arrangements. Reasons for extra-legal ownership include excessive bureaucratic red tape in buying property and building, In some countries it can take over 200 steps and up to 14 years to build on government land. Other causes of extra-legal property are failures to notarize transaction documents or having documents notarized but failing to have them recorded with the official agency.[10]

Rent controls in Brazil dramatically reduced the percentage of legal housing compared to extra-legal housing, which had a much better supply to demand balance.[10]

A number of researchers (David Rodda,[206] Jacob Vigdor,[207] and Janna Matlack), argue that a shortage of affordable housing – at least in the US – is caused in part by income inequality.[208] David Rodda[206][209] noted that from 1984 and 1991, the number of quality rental units decreased as the demand for higher quality housing increased (Rhoda 1994:148).[206] Through gentrification of older neighbourhoods, for example, in East New York, rental prices increased rapidly as landlords found new residents willing to pay higher market rate for housing and left lower income families without rental units, the ad valorem property tax policy combined with rising prices made it difficult or impossible for low income residents to keep pace.[210]

Aspirational consumption and household risk[edit]

Firstly, certain costs are difficult to avoid and are shared by everyone, such as the costs of housing, pensions, education and health care. If the state does not provide these services, then for those on lower incomes, the costs must be borrowed and often those on lower incomes are those who are worse equipped to manage their finances. Secondly, aspirational consumption describes the process of middle income earners aspiring to achieve the standards of living enjoyed by their wealthier counterparts and one method of achieving this aspiration is by taking on debt, the result leads to even greater inequality and potential economic instability.[211]

Poverty[edit]

Oxfam asserts that worsening inequality is impeding the fight against global poverty. A 2013 report from the group stated that the $240 billion added to the fortunes of the world's richest billionaires in 2012 was enough to end extreme poverty four times over. Oxfam Executive Director Jeremy Hobbs said that "We can no longer pretend that the creation of wealth for a few will inevitably benefit the many – too often the reverse is true."[212][213][214]

Jared Bernstein and Elise Gould of the Economic Policy Institute suggest that poverty in the United States could have been significantly mitigated if inequality had not increased over the last few decades.[215][216]

Environment[edit]

Further information: Human impact on the environment

Multiple arguments can be made about the relationship between poverty and the environment; in some cases, alleviating poverty can result in detrimental environmental affects or exacerbate degradation; the smaller the economic inequality, the more waste and pollution is created, resulting in many cases, in more environmental degradation. This can be explained by the fact that as the poor people in the society become more wealthy, it increases their yearly carbon emissions, this relation is expressed by the Environmental Kuznets Curve (EKC).[217][not in citation given][218][219][220] It should be noted here however that in certain cases, with great economic inequality, there is nonetheless not more waste and pollution created as the waste/pollution is cleaned up better afterwards (water treatment, filtering, ...)[221] Also note that the whole of the increase in environmental degradation is the result of the increase of emissions per person being multiplied by a multiplier. If there were fewer people, however, this multiplier would be lower, and thus the amount of environmental degradation would be lower as well, as such, the current high level of population has a large impact on this as well. If (as WWF argued), population levels would start to drop to a sustainable level (1/3 of current levels, so about 2 billion people[222]), human inequality can be addressed/corrected, while still not resulting in an increase of environmental damage.

On the other hand, other sources argue that alleviating poverty will reap positive progressions on the environment, especially with technological advances in energy efficiency. Urbanization, for instance, can "reduce the area in which humans impact the environment, thereby protecting nature elsewhere."[223] Through concentration human societies, urbanized regions can allow for more allocated reserves for wildlife. Moreover, through urbanization, such societies have a higher standard of living that can promote environmental health with better food, technology, education, and more, the argument that links poverty alleviation to environmental conservation outlines the idea that "gross inequalities that exist between rich and poor in the world have created a situation where many people have to sacrifice environmental thinking just to stay alive." [224]

Political influence[edit]

In 2015, a study by Lahtinen and Wass suggested that low social mobility reduces turnout among lower classes.[225]

War, terrorism and political instability[edit]

One study finds that income inequality increases political instability: "more unequal societies are more politically unstable".[226] A 2016 study finds that interregional inequality increases terrorism.[227] Another 2016 study finds that inequality between social classes increases the likelihood of coups but not civil wars.[228] A lack of reliable data makes it difficult to study the relationship between inequality and political violence.[229]

John A. Hobson, Rosa Luxemburg, and Vladimir Lenin argued that WWI was caused by inequality. Economist Branko Milanovic claims that there is credence to this argument in his 2016 book Global Inequality: A New Approach for the Age of Globalization.[230]

Perspectives[edit]

Fairness vs. equality[edit]

According to Christina Starmans et al. (Nature Hum. Beh., 2017), the research literature contains no evidence on people having an aversion on inequality. In all studies analyzed, the subjects preferred fair distributions to equal distributions, in both laboratory and real-world situations; in public, researchers may loosely speak of equality instead of fairness, when referring to studies where fairness happens to coincide with equality, but in many studies fairness is carefully separated from equality and the results are univocal. Already very young children seem to prefer fairness over equality.[231]

When people were asked, what would be the wealth of each quintile in their ideal society, they gave a 50-fold sum to the richest quintile than to the poorest quintile, the preference for inequality increases in adolescence, and so do the capabilities to favor fortune, effort and ability in the distribution.[231]

Preference for unequal distribution has been developed to the human race possibly because it allows for better co-operation and allows a person to work with a more productive person so that both parties benefit from the co-operation. Inequality also solves the problems of free-riders, cheaters and ill-behaving people.[231]

In many societies, such as the USSR, the distribution lead to anger, as it was felt too equal, unfair; in the current U.S., many feel that the distribution is unfair in being too unequal. In both cases, the cause is unfairness, not inequality, the researchers conclude.[231]

Socialist perspectives[edit]

Socialists attribute the vast disparities in wealth to the private ownership of the means of production by a class of owners, creating a situation where a small portion of the population lives off unearned property income by virtue of ownership titles in capital equipment, financial assets and corporate stock. By contrast, the vast majority of the population is dependent on income in the form of a wage or salary; in order to rectify this situation, socialists argue that the means of production should be socially owned so that income differentials would be reflective of individual contributions to the social product.[232]

Marxist socialists ultimately predict the emergence of a communist society based on the common ownership of the means of production, where each individual citizen would have free access to the articles of consumption (From each according to his ability, to each according to his need). According to Marxist philosophy, equality in the sense of free access is essential for freeing individuals from dependent relationships, thereby allowing them to transcend alienation.[233]

Meritocracy[edit]

Meritocracy favors an eventual society where an individual's success is a direct function of his merit, or contribution. Economic inequality would be a natural consequence of the wide range in individual skill, talent and effort in human population. David Landes stated that the progression of Western economic development that led to the Industrial Revolution was facilitated by men advancing through their own merit rather than because of family or political connections.[234]

Liberal perspectives[edit]

Most modern social liberals, including centrist or left-of-center political groups, believe that the capitalist economic system should be fundamentally preserved, but the status quo regarding the income gap must be reformed. Social liberals favor a capitalist system with active Keynesian macroeconomic policies and progressive taxation (to even out differences in income inequality).

However, contemporary classical liberals and libertarians generally do not take a stance on wealth inequality, but believe in equality under the law regardless of whether it leads to unequal wealth distribution. In 1966 Ludwig von Mises, a prominent figure in the Austrian School of economic thought, explains:

The liberal champions of equality under the law were fully aware of the fact that men are born unequal and that it is precisely their inequality that generates social cooperation and civilization. Equality under the law was in their opinion not designed to correct the inexorable facts of the universe and to make natural inequality disappear, it was, on the contrary, the device to secure for the whole of mankind the maximum of benefits it can derive from it. Henceforth no man-made institutions should prevent a man from attaining that station in which he can best serve his fellow citizens.

Robert Nozick argued that government redistributes wealth by force (usually in the form of taxation), and that the ideal moral society would be one where all individuals are free from force. However, Nozick recognized that some modern economic inequalities were the result of forceful taking of property, and a certain amount of redistribution would be justified to compensate for this force but not because of the inequalities themselves. John Rawls argued in A Theory of Justice[58] that inequalities in the distribution of wealth are only justified when they improve society as a whole, including the poorest members. Rawls does not discuss the full implications of his theory of justice. Some see Rawls's argument as a justification for capitalism since even the poorest members of society theoretically benefit from increased innovations under capitalism; others believe only a strong welfare state can satisfy Rawls's theory of justice.

Classical liberal Milton Friedman believed that if government action is taken in pursuit of economic equality then political freedom would suffer; in a famous quote, he said:

A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.

Economist Tyler Cowen has argued that though income inequality has increased within nations, globally it has fallen over the last 20 years, he argues that though income inequality may make individual nations worse off, overall, the world has improved as global inequality has been reduced.[235]

Social justice arguments[edit]

Patrick Diamond and Anthony Giddens (professors of Economics and Sociology, respectively) hold that 'pure meritocracy is incoherent because, without redistribution, one generation's successful individuals would become the next generation's embedded caste, hoarding the wealth they had accumulated'.

They also state that social justice requires redistribution of high incomes and large concentrations of wealth in a way that spreads it more widely, in order to "recognise the contribution made by all sections of the community to building the nation's wealth." (Patrick Diamond and Anthony Giddens, June 27, 2005, New Statesman)[236]

Pope Francis stated in his Evangelii gaudium, that "as long as the problems of the poor are not radically resolved by rejecting the absolute autonomy of markets and financial speculation and by attacking the structural causes of inequality, no solution will be found for the world's problems or, for that matter, to any problems."[237] He later declared that "inequality is the root of social evil."[238]

When income inequality is low, aggregate demand will be relatively high, because more people who want ordinary consumer goods and services will be able to afford them, while the labor force will not be as relatively monopolized by the wealthy.[156][179]

Effects on social welfare[edit]

In most western democracies, the desire to eliminate or reduce economic inequality is generally associated with the political left. One practical argument in favor of reduction is the idea that economic inequality reduces social cohesion and increases social unrest, thereby weakening the society. There is evidence that this is true (see inequity aversion) and it is intuitive, at least for small face-to-face groups of people.[citation needed] Alberto Alesina, Rafael Di Tella, and Robert MacCulloch find that inequality negatively affects happiness in Europe but not in the United States.[239]

It has also been argued that economic inequality invariably translates to political inequality, which further aggravates the problem. Even in cases where an increase in economic inequality makes nobody economically poorer, an increased inequality of resources is disadvantageous, as increased economic inequality can lead to a power shift due to an increased inequality in the ability to participate in democratic processes.[240]

Capabilities approach[edit]

Further information: Capability approach

The capabilities approach – sometimes called the human development approach – looks at income inequality and poverty as form of "capability deprivation".[241] Unlike neoliberalism, which "defines well-being as utility maximization", economic growth and income are considered a means to an end rather than the end itself,[242] its goal is to "wid[en] people's choices and the level of their achieved well-being"[243] through increasing functionings (the things a person values doing), capabilities (the freedom to enjoy functionings) and agency (the ability to pursue valued goals).[244]

When a person's capabilities are lowered, they are in some way deprived of earning as much income as they would otherwise. An old, ill man cannot earn as much as a healthy young man; gender roles and customs may prevent a woman from receiving an education or working outside the home. There may be an epidemic that causes widespread panic, or there could be rampant violence in the area that prevents people from going to work for fear of their lives,[241] as a result, income and economic inequality increases, and it becomes more difficult to reduce the gap without additional aid. To prevent such inequality, this approach believes it's important to have political freedom, economic facilities, social opportunities, transparency guarantees, and protective security to ensure that people aren't denied their functionings, capabilities, and agency and can thus work towards a better relevant income.

Policy responses intended to mitigate[edit]

No business which depends for existence on paying less than living wages to its workers has any right to continue in this country.

— President Franklin Delano Roosevelt, 1933[245]

A 2011 OECD study makes a number of suggestions to its member countries, including:[9]

  • Well-targeted income-support policies.
  • Facilitate and encourage access to employment.
  • Better job-related training and education for the low-skilled (on-the-job training) would help to boost their productivity potential and future earnings.
  • Better access to formal education.

Progressive taxation reduces absolute income inequality when the higher rates on higher-income individuals are paid and not evaded, and transfer payments and social safety nets result in progressive government spending.[246][247][248] Wage ratio legislation has also been proposed as a means of reducing income inequality. The OECD asserts that public spending is vital in reducing the ever-expanding wealth gap.[249]

The economists Emmanuel Saez and Thomas Piketty recommend much higher top marginal tax rates on the wealthy, up to 50 percent, or 70 percent or even 90 percent.[250] Ralph Nader, Jeffrey Sachs, the United Front Against Austerity, among others, call for a financial transactions tax (also known as the Robin Hood tax) to bolster the social safety net and the public sector.[251][252][253]

The Economist wrote in December 2013: "A minimum wage, providing it is not set too high, could thus boost pay with no ill effects on jobs....America's federal minimum wage, at 38% of median income, is one of the rich world's lowest, some studies find no harm to employment from federal of state minimum wages, others see a small one, but none finds any serious damage."[254]

General limitations on and taxation of rent-seeking are popular across the political spectrum.[255]

Public policy responses addressing causes and effects of income inequality in the US include: progressive tax incidence adjustments, strengthening social safety net provisions such as Aid to Families with Dependent Children, welfare, the food stamp program, Social Security, Medicare, and Medicaid, organizing community interest groups, increasing and reforming higher education subsidies, increasing infrastructure spending, and placing limits on and taxing rent-seeking.[256]

A 2017 study in the Journal of Political Economy by Daron Acemogu, James Robinson and Thierry Verdier argues that American "cutthroat" capitalism and inequality gives rise to technology and innovation that more "cuddly" forms of capitalism cannot,[257] as a result, "the diversity of institutions we observe among relatively advanced countries, ranging from greater inequality and risk-taking in the United States to the more egalitarian societies supported by a strong safety net in Scandinavia, rather than reflecting differences in fundamentals between the citizens of these societies, may emerge as a mutually self-reinforcing world equilibrium. If so, in this equilibrium, "we cannot all be like the Scandinavians," because Scandinavian capitalism depends in part on the knowledge spillovers created by the more cutthroat American capitalism."[257] A 2012 working paper by the same authors, making similar arguments, was challenged by Lane Kenworthy, who posited that, among other things, the Nordic countries are consistently ranked as some of the world's most innovative countries by the World Economic Forum's Global Competitiveness Index, with Sweden ranking as the most innovative nation, followed by Finland, for 2012–2013; the U.S. ranked sixth.[258]

Mitigating factors[edit]

Countries with a left-leaning legislature generally have lower levels of inequality.[259][260] Many factors constrain economic inequality – they may be divided into two classes: government sponsored, and market driven, the relative merits and effectiveness of each approach is a subject of debate.

Typical government initiatives to reduce economic inequality include:

  • Public education: increasing the supply of skilled labor and reducing income inequality due to education differentials.[261]
  • Progressive taxation: the rich are taxed proportionally more than the poor, reducing the amount of income inequality in society if the change in taxation does not cause changes in income.[262]

Market forces outside of government intervention that can reduce economic inequality include:

  • propensity to spend: with rising wealth & income, a person may spend more. In an extreme example, if one person owned everything, they would immediately need to hire people to maintain their properties, thus reducing the wealth concentration.[263]

Research shows that since 1300, the only periods with significant declines in wealth inequality in Europe were the Black Death and the two World Wars.[264] Historian Walter Scheidel posits that, since the stone age, only extreme violence, catastrophes and upheaval in the form of total war, Communist revolution, pestilence and state collapse have significantly reduced inequality.[265][266] He has stated that "only all-out thermonuclear war might fundamentally reset the existing distribution of resources" and that "peaceful policy reform may well prove unequal to the growing challenges ahead."[267][268]

See also[edit]

References[edit]

  1. ^ a b c d "A three-headed hydra". The Economist. July 16, 2014. 
  2. ^ Fletcher, Michael A. (March 10, 2013). "Research ties economic inequality to gap in life expectancy". Washington Post. Retrieved March 23, 2013. 
  3. ^ Wojciech Kopczuk, Emmanuel Saez, and Jae Song find that "most of the increase in the variance of ... annual earnings is due to increases in the variance of ... permanent earnings with modest increases in the variance of transitory ... earnings." Thus, in fact, the increase in earnings inequality is in lifetime income. Furthermore, they find that it remains difficult for someone to move up the earnings distribution (though they do find upward mobility for women in their lifetime). See their "Earnings Inequality and Mobility in the United States: Evidence from Social Security Data since 1937," Quarterly Journal of Economics. 125, no. 1 (2010): 91–128.
  4. ^ a b c Temple, Jonathan (1999). "The New Growth Evidence". Journal of Economic Literature. 37 (1): 112–56. doi:10.1257/jel.37.1.112. 
  5. ^ a b Neves, Pedro Cunha; Afonso, Óscar; Silva, Sandra Tavares (February 2016). "A Meta-Analytic Reassessment of the Effects of Inequality on Growth". World Development. 78: 386–400. doi:10.1016/j.worlddev.2015.10.038. 
  6. ^ "The Globalization of Inequality". Princeton University Press. Retrieved August 19, 2017. 
  7. ^ "the first historical series of income distribution statistics became available with the publication in 1953 of Kuznets's monumental Shares of Upper Income Groups in Income and Savings. Kuznets's series dealt with only one country (the United States) over a period of thirty-five years (1913–1948), it was nevertheless a major contribution, which drew on two sources of data totally unavailable to nineteenth-century authors: US federal income tax returns (which did not exist before the creation of the income tax in 1913) and Kuznets's own estimates of US national income from a few years earlier." Piketty, Thomas. Capital in the Twenty-First Century (Kindle Locations 276–80). Harvard University Press. Kindle Edition.
  8. ^ Piketty, Thomas. Capital in the Twenty-First Century (Kindle Locations 286–87). Harvard University Press. Kindle Edition.
  9. ^ a b c d e f g h i j k l m n Divided We Stand: Why Inequality Keeps Rising. OECD. 2011. doi:10.1787/9789264119536-en. ISBN 978-92-64-11953-6. 
  10. ^ a b c d De Soto, Hernando (2000). The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. Basic Books. ISBN 978-0-465-01614-3. [page needed]
  11. ^ Hunt, Michael (2004). The World Transformed: 1945 to the Present. Boston: Bedford/St. Martin's. p. 442. ISBN 978-0312245832. 
  12. ^ a b c d Gurría, Angel (December 5, 2011). Press Release for Divided We Stand: Why Inequality Keeps Rising (Report). OECD. doi:10.1787/9789264119536-en. Retrieved December 16, 2011. 
  13. ^ "Stock quotes, financial tools, news and analysis – MSN Money". msn.com. 
  14. ^ "Growth of millionaires in India fastest in world ". Thaindian News. June 25, 2008.
  15. ^ Rigged rules mean economic growth increasingly "winner takes all" for rich elites all over world. Oxfam. January 20, 2014.
  16. ^ Neuman, Scott (January 20, 2014). Oxfam: World's Richest 1 Percent Control Half Of Global Wealth. NPR. Retrieved January 25, 2014.
  17. ^ Stout, David (January 20, 2014). "One Stat to Destroy Your Faith in Humanity: The World's 85 Richest People Own as Much as the 3.5 Billion Poorest". Time. Retrieved January 21, 2014. 
  18. ^ Wearden, Graeme (January 20, 2014). "Oxfam: 85 richest people as wealthy as poorest half of the world". The Guardian. Retrieved January 21, 2014. 
  19. ^ a b Kristof, Nicholas (July 22, 2014). "An Idiot's Guide to Inequality". New York Times. Retrieved July 22, 2014. 
  20. ^ Jim Puzzanghera (January 20, 2014). 85 richest people own as much as bottom half of population, report says. Los Angeles Times. Retrieved January 22, 2014.
  21. ^ Cohen, Patricia (January 19, 2015). "Richest 1% Likely to Control Half of Global Wealth by 2016, Study Finds". New York Times. Retrieved January 19, 2015. 
  22. ^ Larry Elliott and Ed Pilkington (January 19, 2015). New Oxfam report says half of global wealth held by the 1%. The Guardian. Retrieved January 19, 2015.
  23. ^ Jill Treanor (October 13, 2014). Richest 1% of people own nearly half of global wealth, says report. The Guardian. Retrieved October 14, 2014.
  24. ^ Jill Treanor (October 13, 2015). Half of world's wealth now in hands of 1% of population – report. The Guardian. Retrieved October 15, 2015.
  25. ^ Richest 62 people as wealthy as half of world's population, says Oxfam. The Guardian, January 18, 2016.
  26. ^ "Be careful with that viral statistic about the top 1% owning half the world's wealth". Vox. Retrieved January 18, 2016. 
  27. ^ a b Vara, Vauhini (January 28, 2015). "Critics of Oxfam's Poverty Statistics Are Missing the Point". The New Yorker. ISSN 0028-792X. Retrieved January 18, 2016. 
  28. ^ "Press Release: Oxfam's wealth inequality stats are deeply misleading «". www.adamsmith.org. Retrieved January 18, 2016. 
  29. ^ "Oxfam's Misleading Wealth Statistics". Fusion. Retrieved January 18, 2016. 
  30. ^ "Oxfam's global inequality statistics: don't believe the anti-capitalist hype". www.iea.org.uk. Retrieved January 18, 2016. 
  31. ^ Elliott, Larry (January 15, 2017). "World's eight richest people have same wealth as poorest 50%". The Guardian. Retrieved January 16, 2017. 
  32. ^ Elliott, Larry (January 21, 2018). "Inequality gap widens as 42 people hold same wealth as 3.7bn poorest". The Guardian. Retrieved January 23, 2018. 
  33. ^ Kertscher, Tom; Borowski, Greg (March 10, 2011). "The Truth-O-Meter Says: True – Michael Moore says 400 Americans have more wealth than half of all Americans combined". PolitiFact. Retrieved August 11, 2013. 
  34. ^ Moore, Michael (March 6, 2011). "America Is Not Broke". Huffington Post. Retrieved August 11, 2013. 
  35. ^ Moore, Michael (March 7, 2011). "The Forbes 400 vs. Everybody Else". michaelmoore.com. Archived from the original on March 9, 2011. Retrieved August 11, 2013. 
  36. ^ Pepitone, Julianne (September 22, 2010). "Forbes 400: The super-rich get richer". CNN. Retrieved August 11, 2013. 
  37. ^ Bruenig, Matt (March 24, 2014). "You call this a meritocracy? How rich inheritance is poisoning the American economy". Salon. Retrieved August 24, 2014. 
  38. ^ Staff (March 18, 2014). "Inequality – Inherited wealth". The Economist. Retrieved August 24, 2014. 
  39. ^ Pizzigati, Sam (September 24, 2012). "The 'Self-Made' Hallucination of America's Rich". Institute for Policy Studies. Retrieved August 24, 2014. 
  40. ^ Neate, Rupert (November 8, 2017). "Bill Gates, Jeff Bezos and Warren Buffett are wealthier than poorest half of US". The Guardian. Retrieved November 9, 2017. 
  41. ^ Taylor, Matt (November 9, 2017). "The Paradise Papers Are Just a Glimpse at the Unreal Wealth Gap". Vice. Retrieved November 10, 2017. 
  42. ^ Neate, Rupert (October 26, 2017). "World's witnessing a new Gilded Age as billionaires' wealth swells to $6tn". The Guardian. Retrieved October 27, 2017. 
  43. ^ Novotný, Josef (2007). "On the measurement of regional inequality: Does spatial dimension of income inequality matter?". The Annals of Regional Science. 41 (3): 563–80. doi:10.1007/s00168-007-0113-y. 
  44. ^ Mark Anderson (July 24, 2014). Jobs and social security needed as income inequality widens, UNDP warn. The Guardian. Retrieved July 24, 2014.
  45. ^ Norton, Michael I.; Ariely, Dan (2011). "Building a Better America—One Wealth Quintile at a Time". Perspectives on Psychological Science. 6 (1): 9–12. doi:10.1177/1745691610393524. PMID 26162108. 
  46. ^ Hellebrandt; Mauro. "The Future of Worldwide Income Distribution". 
  47. ^ Improving job quality and reducing gender gaps are essential to tackling growing inequality. OECD, May 21, 2015.
  48. ^ Era Dabla-Norris; Kalpana Kochhar; Nujin Suphaphiphat; Frantisek Ricka; Evridiki Tsounta (June 15, 2015). Causes and Consequences of Income Inequality : A Global Perspective. International Monetary Fund. Retrieved June 16, 2015.
  49. ^ Dunsmuir, Lindsay (October 11, 2017). "IMF calls for fiscal policies that tackle rising inequality". Reuters. Retrieved October 30, 2017. 
  50. ^ Domeij, David; Klein, Paul (January 2000). "Accounting for Swedish wealth inequality" (PDF). Archived from the original (PDF) on May 19, 2003. 
  51. ^ Credit Suisse, Research Institute – Global Wealth Databook 2013. Page 129.
  52. ^ "Country Comparison: Distribution of family income – Gini index". The World Factbook. CIA. Retrieved 8 May 2017. 
  53. ^ Piketty, Thomas (2014). Capital in the Twenty-First Century. Belknap Press. ISBN 067443000X p. 571
  54. ^ a b Piketty, Thomas, and Emmanuel Saez. "Income Inequality in the United States, 1913–1998". Tech. 1st ed. Vol. CXVIII. Quarterly Journal of Economics, 2003. Print.
  55. ^ "Tackling Ethnic and Regional Inequalities" (PDF). Combating Poverty and Inequality: Structural Change, Social Polics, and Politi. United Nations Research Institute for Social Development. Retrieved October 18, 2011. 
  56. ^ U.S. Bureau of Labor Statistics. Highlights of Women’s Earnings in 2009. Report 1025, June 2010.
  57. ^ Charlton, B. G. (1996). "What is the ultimate cause of socio-economic inequalities in health? An explanation in terms of evolutionary psychology" (PDF). Journal of the Royal Society of Medicine. 89 (1): 3–8. PMC 1295633 Freely accessible. PMID 8709080. 
  58. ^ a b Rawls, John (2005). A Theory of Justice. Belknap Press of Harvard University Press. ISBN 978-0674017726. 
  59. ^ Neoliberalism: Oversold? – IMF Finance & Development June 2016 • Volume 53 • Number 2
  60. ^ Branko Milanovic (2012). The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality. ISBN 978-0465031412. 
  61. ^ Hunt, E. K.; Lautzenheiser, Mark (2014). History of Economic Thought: A Critical Perspective. PHI Learning. ISBN 978-0765625991. 
  62. ^ Keen, Steve (2011). Debunking Economics – Revised and Expanded Edition: The Naked Emperor Dethroned?. Zed Books. p. 110. ISBN 978-1848139923. The basis for this advice is the proposition that a person's income is determined by her contribution to production – or more precisely, by the marginal productivity of the 'factor of production' to which she contributes...The argument that highly paid workers – managers of major corporations, stock and money market traders, financial commentators, etc – deserve the high wages they receive compared to the less highly paid – nuclear physicists, rocket scientists, university professors, school teachers, etc. – is simply an extension of this argument to cover subgroups of workers. Members of the former group, we are told, are simply more productive than members of the latter, hence their higher salaries. 
  63. ^ Wood, John Cunningham (1996). Karl Marx's Economics: Critical Assessments I and II. Routledge. ISBN 978-0415087148. 
  64. ^ Stiglitz, Joseph E. (June 4, 2012). The Price of Inequality: How Today's Divided Society Endangers Our Future (p. 34). Norton. Kindle Edition.
  65. ^ Stiglitz, Joseph E. (June 4, 2012). The Price of Inequality: How Today's Divided Society Endangers Our Future . Norton. Kindle Edition. p. 9.
  66. ^ Hazlitt, Henry (December 1988). "Chapter 20: Part 2". Economics in One Lesson. Three Rivers Press. ISBN 978-0-517-54823-3. Archived from the original on July 8, 2010. 
  67. ^ Hazlitt, Henry (December 1988). "Chapter 20: Part 1". Economics in One Lesson. Three Rivers Press. ISBN 978-0-517-54823-3. Archived from the original on July 8, 2010. 
  68. ^ Stiglitz, Joseph E. (June 4, 2012). The Price of Inequality: How Today's Divided Society Endangers Our Future . Norton. Kindle Edition. p. 8.
  69. ^ Xavier-Oliveira, Emanuel; Laplume, André O; Pathak, Saurav (2015). "What motivates entrepreneurial entry under economic inequality? The role of human and financial capital". Human Relations. 68 (7): 1183–207. doi:10.1177/0018726715578200. SSRN 2585021 Freely accessible. 
  70. ^ Webster (4b): increasing in rate as the base increases (a progressive tax)
  71. ^ American Heritage Archived February 9, 2009, at the Wayback Machine. (6). Increasing in rate as the taxable amount increases.
  72. ^ Britannica Concise Encyclopedia: Tax levied at a rate that increases as the quantity subject to taxation increases.
  73. ^ Princeton University WordNet[permanent dead link]: (n) progressive tax (any tax in which the rate increases as the amount subject to taxation increases)
  74. ^ Sommerfeld, Ray M., Silvia A. Madeo, Kenneth E. Anderson, Betty R. Jackson (1992), Concepts of Taxation, Dryden Press: Fort Worth, TX
  75. ^ Alesina, Alberto; Dani Rodrick (May 1994). "Distributive Politics and Economic Growth" (PDF). Quarterly Journal of Economics. 109 (2): 465–90. doi:10.2307/2118470. Retrieved October 17, 2013. 
  76. ^ Shlomo Yitzhaki (1998). "More than a Dozen Alternative Ways of Spelling Gini" (PDF). Economic Inequality. 8: 13–30. 
  77. ^ "Tax Evasion and Inequality" (PDF). 
  78. ^ IMF: higher taxes for rich will cut inequality without hitting growth The Guardian
  79. ^ Becker, Gary S.; Murphy, Kevin M. (May 2007). "The Upside of Income Inequality". The America. Retrieved January 8, 2014. 
  80. ^ Bosworth, Barry; Burtless, Gary; Steuerle, C. Eugene (December 1999). Lifetime Earnings Patterns, the Distribution of Future Social Security Benefits, and the Impact of Pension Reform (PDF) (report no. CRR WP 1999-06). Chestnut Hill, Massachusetts: Center for Retirement Research at Boston College. p. 43. Retrieved October 1, 2012. 
  81. ^ Boak, Josh (August 6, 2014). "S&P: Widening wealth gap slows economic recovery". Associated Press, as published in the Salt Lake Tribune. p. A10. Retrieved August 10, 2014. 
  82. ^ "America's Elite: An Hereditary meritocracy". The Economist. January 24, 2015. Retrieved September 15, 2015. 
  83. ^ "Education and class. America's new aristocracy". The Economist. January 24, 2015. Retrieved January 29, 2015. 
  84. ^ "Education and class. America's new aristocracy". The Economist. January 24, 2015. Retrieved January 29, 2015. The result is that America is one of only three advanced countries that spends more on richer pupils than poor ones, according to the OECD (the other two are Turkey and Israel) 
  85. ^ Schmitt, John and Ben Zipperer. 2006. "Is the U.S. a Good Model for Reducing Social Exclusion in Europe?" CEPR
  86. ^ Doree Armstrong (February 12, 2014). Jake Rosenfeld explores the sharp decline of union membership, influence. UW Today. Retrieved December 20, 2014. See also: Jake Rosenfeld, What Unions No Longer Do, (Harvard University Press, 2014), ISBN 0674725115
  87. ^ Michael Hiltzik (March 25, 2015). IMF agrees: Decline of union power has increased income inequality. Los Angeles Times. Retrieved March 26, 2015.
  88. ^ Florence Jaumotte and Carolina Osorio Buitron (March 2015). Power from the People. International Monetary Fund. Retrieved March 18, 2015.
  89. ^ IMF: The last generation of economic policies may have been a complete failure. Business Insider. May 2016.
  90. ^ a b c d Rothwell, Jonathan (17 November 2017). "Myths of the 1 Percent: What's Putting People at the Top". New York Times. Retrieved 17 November 2017. 
  91. ^ Basu, Kaushik (6 January 2016). "Is technology making inequality worse?". World Economic Forum. Retrieved 17 November 2017. 
  92. ^ Rotman, David (21 October 2014). "Technology and Inequality". MIT Technology Review. Retrieved 17 November 2017. 
  93. ^ a b Branko Milanovic-Global Income Inequality by the Numbers-In History and Now-February 2013
  94. ^ a b "Economic Focus:". The Economist. London: The Economist Group. April 19, 2008. p. 81. 
  95. ^ Roser, Max; Cuaresma, Jesus Crespo (2016). "Why is Income Inequality Increasing in the Developed World?". Review of Income and Wealth. 62 (1): 1–27. doi:10.1111/roiw.12153. 
  96. ^ Smith, Noah (June 27, 2016). "The Left and Right Stumble on Globalization" – via www.bloomberg.com. 
  97. ^ OECD. OECD Employment Outlook 2008 – Statistical Annex Archived December 6, 2008, at the Wayback Machine.. OECD, Paris, 2008, p. 358.
  98. ^ "Are Women Earning More Than Men?". Forbes. May 12, 2006. 
  99. ^ Lukas, Carrie (April 3, 2007). "A Bargain At 77 Cents To a Dollar". The Washington Post. Retrieved May 3, 2010. 
  100. ^ Weinberg, Daniel H (May 2004). "Evidence From Census 2000 About Earnings by Detailed Occupation for Men and Women" (PDF). Retrieved February 21, 2017. 
  101. ^ "Jobs – Staffing – Workforce Solutions – Randstad USA". vedior.com. 
  102. ^ Nicola Jones, Rebecca Holmes, Jessica Espey 2008. Gender and the MDGs: A gender lens is vital for pro-poor results Archived March 10, 2011, at the Wayback Machine.. London: Overseas Development Institute
  103. ^ Riane Eisler (2007). The Real Wealth of Nations: Creating a Caring Economics. p. 73. 
  104. ^ Rajesh, Jain (2016). Avatar: Lord from Heaven. United States: Partridge India. ISBN 9781482872019. 
  105. ^ pp. 384 Table 12.2, U.S. university endowment size vs. real annual rate of return
  106. ^ "Number of billionaires worldwide surged to 2,754 in 2017". The Guardian. 15 May 2018. 
  107. ^ "The World's Billionaires". Forbes. 11 March 2009. Retrieved 1 April 2012. 
  108. ^ Stiglitz, Joseph E. (June 4, 2012). The Price of Inequality: How Today's Divided Society Endangers Our Future (pp. 30–1, 35–6). Norton. Kindle Edition.
  109. ^ Stiglitz, Joseph E. (June 4, 2012). The Price of Inequality: How Today's Divided Society Endangers Our Future (p. 32). Norton. Kindle Edition.
  110. ^ Railroad land grants Archived December 18, 2006, at the Wayback Machine.
  111. ^ "Earthworks – General Mining Law of 1872". earthworksaction.org. 
  112. ^ General Mining Act of 1872#The Mining Law of 1872
  113. ^ Stiglitz, Joseph E. (June 4, 2012). The Price of Inequality, p. 48.
  114. ^ Stiglitz, Joseph E. (June 4, 2012). The Price of Inequality, p. 42.
  115. ^ Stiglitz, Joseph E. (June 4, 2012). The Price of Inequality, p. 44.
  116. ^ James K. Galbraith, Inequality and Instability: A Study of the World Economy Just before the Great Crisis (New York: Oxford University Press, 2012).
  117. ^ Stiglitz, Joseph E. (June 4, 2012). The Price of Inequality: How Today's Divided Society Endangers Our Future, p. 334. Norton. Kindle Edition.
  118. ^ a b Pickett and Wilkinson, The Spirit Level, 2011, p. 5.
  119. ^ a b "Happiness: Has Social Science A Clue?" Richard Layard 2003
  120. ^ a b c More or Less| Branko Milanovic| Finance & Development| September 2011| Vol. 48, No. 3
  121. ^ De Vogli, R. (2005). "Has the relation between income inequality and life expectancy disappeared? Evidence from Italy and top industrialised countries". Journal of Epidemiology & Community Health. 59 (2): 158–62. doi:10.1136/jech.2004.020651. 
  122. ^ Kaplan, G. A; Pamuk, E. R; Lynch, J. W; Cohen, R. D; Balfour, J. L (1996). "Inequality in income and mortality in the United States: Analysis of mortality and potential pathways". BMJ. 312 (7037): 999–1003. doi:10.1136/bmj.312.7037.999. PMC 2350835 Freely accessible. PMID 8616393. 
  123. ^ Christoffersen, John (October 14, 2013). "Rising inequality 'most important problem,' says Nobel-winning economist". St. Louis Post-Dispatch. Retrieved October 19, 2013. 
  124. ^ Staff (December 9, 2014). "Inequality hurts economic growth, finds OECD research". Organisation for Economic Co-operation and Development. Retrieved February 8, 2015. 
  125. ^ Motesharrei, Safa; Rivas, Jorge; Kalnay, Eugenia (2014). "Human and nature dynamics (HANDY): Modeling inequality and use of resources in the collapse or sustainability of societies". Ecological Economics. 101: 90–102. doi:10.1016/j.ecolecon.2014.02.014. 
  126. ^ Alesina, A.; Rodrik, D. (1994). "Distributive Politics and Economic Growth". The Quarterly Journal of Economics. 109 (2): 465–90. doi:10.2307/2118470. JSTOR 2118470. 
  127. ^ Espuelas, Sergio (2015). "The inequality trap. A comparative analysis of social spending between 1880 and 1930". The Economic History Review. 68 (2): 683–706. doi:10.1111/1468-0289.12062. 
  128. ^ Alexander Krauss, 2016. The scientific limits of understanding the (potential) relationship between complex social phenomena: the case of democracy and inequality. Vol. 23(1). Journal of Economic Methodology.
  129. ^ Scheve, Kenneth; Stasavage, David (2017). "Wealth Inequality and Democracy". Annual Review of Political Science. 20 (1): 451–68. doi:10.1146/annurev-polisci-061014-101840. 
  130. ^ "The Spirit Level". equalitytrust.org.uk. 
  131. ^ Pickett, KE; Wilkinson, RG (March 2015). "Income inequality and health: a causal review". Social Science & Medicine. 128: 316–26. doi:10.1016/j.socscimed.2014.12.031. PMID 25577953. 
  132. ^ Sapolsky, Robert (2005). "Sick of Poverty". Scientific American. 293 (6): 92–9. doi:10.1038/scientificamerican1205-92. PMID 16323696. 
  133. ^ Pickett and Wilkinson, The Spirit Level, 2011, p. 82.
  134. ^ (At the same time however, there is a strong connection between average income and health within countries. Example: Comparing average death rates in United States zip code areas organized by average income finds the highest income zip codes average a little over 90 deaths per 10,000, the poorest zip codes a little over 50 deaths and a "strikingly" regular gradient of death rates for income in between. source: Figure 1.4, Pickett and Wilkinson, The Spirit Level, 2011, p. 13, Authors: "What is so striking about Figure 1.4 is how regular the health gradient is right across society". Data from: Smith, G D; Neaton, J D; Wentworth, D; Stamler, R; Stamler, J (1996). "Socioeconomic differentials in mortality risk among men screened for the Multiple Risk Factor Intervention Trial: I. White men". American Journal of Public Health. 86 (4): 486–96. doi:10.2105/AJPH.86.4.486. PMC 1380548 Freely accessible. PMID 8604778. )
  135. ^ Pickett and Wilkinson, The Spirit Level, 2011, pp. 306–9. Figure 2.2 found on p. 20 and this page
  136. ^ the authors found a Pearson Correlation Coefficient of 0.87 for the index and inequality among 20 developed countries for which data was available. Pickett and Wilkinson, The Spirit Level, 2011, p. 310.
  137. ^ a coefficient of 0.59 for 40 US states for which data was available (the index for US states did not include a component for mobility in its index). For both populations the statistical significance p-value was >0.01. Pickett and Wilkinson, The Spirit Level, 2011, p. 310.
  138. ^ compare figures 2.6 and 2.7 in Pickett and Wilkinson, The Spirit Level, 2011, pp. 23–4. Data from An overview of child well-being in rich countries The United Nations Children's Fund, 2007
  139. ^ The Spirit Level: how 'ideas wreckers' turned book into political punchbag| Robert Booth| The Guardian| August 13, 2010
  140. ^ Kawachi, Ichiro. S.V. Subramanian. Social Epidemiology. p. 126. [full citation needed]
  141. ^ Burns, Jonathan K; Tomita, Andrew; Kapadia, Amy S (2014). "Income inequality and schizophrenia: Increased schizophrenia incidence in countries with high levels of income inequality". International Journal of Social Psychiatry. 60 (2): 185–96. doi:10.1177/0020764013481426. PMC 4105302 Freely accessible. PMID 23594564. 
  142. ^ Inequality Trust and Political Engagement Eric Uslaner and Mitchell Brown, 2002
  143. ^ Making Democracy Work: Civic Traditions in Modern Italy (Putnam, Leonardi, and Nanetti, 1993)
  144. ^ Robert Putnam, Bowling Alone: The Collapse and Revival of American Community 2000
  145. ^ Robert Putnam, Bowling Alone: The Collapse and Revival of American Community, 2000, p. 359.
  146. ^ Albrekt Larsen, Christian (2013). The Rise and Fall of Social Cohesion: The Construction and De-construction of Social Trust in the US, UK, Sweden and Denmark. Oxford: Oxford University Press[page needed]
  147. ^ The Price of Inequality: How Today's Divided Society Endangers Our Future, Stiglitz, J.E., (2012) W.W. Norton & Company, ISBN 978-0393088694[page needed]
  148. ^ Income inequality and homicide rates in Canada and The United Archived October 2, 2008, at the Wayback Machine.
  149. ^ Neapolitan, Jerome L (1999). "A comparative analysis of nations with low and high levels of violent crime". Journal of Criminal Justice. 27 (3): 259–74. doi:10.1016/S0047-2352(98)00064-6. 
  150. ^ Lee, Matthew R.; Bankston, William B. (1999). "Political structure, economic inequality, and homicide: A cross-national analysis". Deviant Behavior. 20 (1): 27–55. doi:10.1080/016396299266588. 
  151. ^ Kang, Songman (2015). "Inequality and crime revisited: Effects of local inequality and economic segregation on crime". Journal of Population Economics. 29 (2): 593. doi:10.1007/s00148-015-0579-3. 
  152. ^ Bram Lancee and Hermanvande Werfhorst (2011) "Income Inequality and Participation: A Comparison of 24 European Countries" GINI Discussion Paper No. 6 (Amsterdam Centre for Inequality Studies)
  153. ^ The Equality Trust (2012) "Income Inequality and Participation"[permanent dead link] Research Update No. 4
  154. ^ Blanchard and Oswald 2000, 2003
  155. ^ The Elements of Justice By David Schmidtz (2006)
  156. ^ a b The Economics of Welfare| Arthur Cecil Pigou
  157. ^ Whitfield, John (28 September 2011). "Libertarians With Antlers". slate.com. Retrieved 6 November 2012. 
  158. ^ Johnson, Smeeding, Tory, "Economic Inequality" in Monthly Labor review of April 2005, table 3.
  159. ^ see also "Consumption and the Myths of Inequality", by Kevin Hassett and Aparna Mathur, Wall Street Journal, October 24, 2012
  160. ^ Edsall, Thomas B. (January 30, 2013). "The Hidden Prosperity of the Poor". New York Times. Retrieved January 2, 2013. 
  161. ^ a b "Conservative Inequality Denialism," by Timothy Noah The New Republic (October 25, 2012)
  162. ^ Attanasio, Orazio; Hurst, Erik; Pistaferri, Luigi (2012). "The Evolution of Income, Consumption, and Leisure Inequality in The US, 1980–2010". NBER Working Papers #17982. SSRN 2035781 Freely accessible. 
  163. ^ Congressional Budget Office: Trends in the Distribution of Household Income Between 1979 and 2007. October 2011. p. 5
  164. ^ "The United States of Inequality, Entry 10: Why We Can't Ignore Growing Income Inequality," by Timothy Noah, Slate (September 16, 2010)
  165. ^ The Way Forward By Daniel Alpert, Westwood Capital; Robert Hockett, Professor of Law, Cornell University; and Nouriel Roubini, Professor of Economics, New York University, New America Foundation, October 10, 2011
  166. ^ Plumer, Brad. "'Trickle-down consumption': How rising inequality can leave everyone worse off". 27 March 2013. Washington Post. Retrieved March 27, 2013. 
  167. ^ Lo, Andrew W. "Reading About the Financial Crisis: A 21-Book Review" (PDF). 2012. Journal of Economic Literature . Archived from the original (PDF) on January 13, 2013. Retrieved November 27, 2013. 
  168. ^ Koehn, Nancy F. (July 31, 2010). "A Call to Fix the Fundamentals (Review of Fault Lines: How Hidden Fractures Still Threaten the World Economy by Raghuram G. Rajan)". New York Times. Retrieved November 20, 2013. 
  169. ^ Pigou, Arthur C. (1932). "Part I, Chapter VIII". The Economics of Welfare (4th ed.). London: Macmillan and Co. Retrieved August 11, 2014. 
  170. ^ a b Lynn, Barry C.; Longman, Phillip (March–April 2010). "Who Broke America's Jobs Machine?". Washington Monthly. Retrieved August 11, 2014. 
  171. ^ Castells-Quintana, David; Royuela, Vicente (2012). "Unemployment and long-run economic growth: The role of income inequality and urbanisation" (PDF). Investigaciones Regionales. 12 (24): 153–73. Retrieved October 17, 2013. 
  172. ^ The Theory of Moral Sentiments, Part I, Section III, Chapter II
  173. ^ Luxury Fever Archived June 13, 2013, at the Wayback Machine. (excerpt)| milkeninstitute.org
  174. ^ Economist Robert Frank at the Commonwealth Club MPR June 26, 2009, 12:00 p.m.
  175. ^ a b Clarke, George R.G. (1995). "More evidence on income distribution and growth". Journal of Development Economics. 47 (2): 403–27. doi:10.1016/0304-3878(94)00069-o. 
  176. ^ Baumol, William J. (2007). "On income distribution and growth". Journal of Policy Modeling. 29 (4): 545–8. doi:10.1016/j.jpolmod.2007.05.004. 
  177. ^ Herzer, Dierk; Vollmer, Sebastian (2013). "Rising top incomes do not raise the tide". Journal of Policy Modeling. 35 (4): 504–19. doi:10.1016/j.jpolmod.2013.02.011. 
  178. ^ a b c d e Berg, Andrew G.; Ostry, Jonathan D. (2011). "Equality and Efficiency". Finance and Development. International Monetary Fund. 48 (3). Retrieved July 13, 2014. 
  179. ^ a b c d e Andrew Berg and Jonathan Ostry. (2011) "Inequality and Unsustainable Growth: Two Sides of the Same Coin" IMF Staff Discussion Note No. SDN/11/08 (International Monetary Fund)
  180. ^ Galor & Zeira 1993.
  181. ^ Perotti, Roberto (1996). "Growth, income distribution, and democracy: What the data say". Journal of Economic Growth. 1 (2): 149. doi:10.1007/bf00138861. 
  182. ^ Barro, Robert J. (March 1999). "Inequality, Growth, and Investment". NBER Working Paper No. 7038. doi:10.3386/w7038. 
  183. ^ Barro 2000.
  184. ^ Ruth-Aida Nahum (February 2, 2005). "Income Inequality and Growth: a Panel Study of Swedish Counties 1960-2000". 
  185. ^ a b Banerjee, Abhijit V.; Duflo, Esther (2003). "Inequality And Growth: What Can The Data Say?". Journal of Economic Growth. 8 (3): 267–99. doi:10.1023/A:1026205114860. Retrieved September 25, 2012. 
  186. ^ Kaldor 1955.
  187. ^ Easterly, William (2007). "Inequality does cause underdevelopment: Insights from a new instrument". Journal of Development Economics. 84 (2): 755–76. doi:10.1016/j.jdeveco.2006.11.002. 
  188. ^ Dabla-Norris, Era; et al. (June 2015). Causes and Consequences of Income Inequality: A Global Perspective (PDF). International Monetary Fund. Retrieved June 29, 2015. 
  189. ^ Bagchi, Sutirtha; Svejnar, Jan (2015). "Does wealth inequality matter for growth? The effect of billionaire wealth, income distribution, and poverty". Journal of Comparative Economics. 43 (3): 505–30. doi:10.1016/j.jce.2015.04.002. 
  190. ^ Stiglitz, Joseph (2009). "The global crisis, social protection and jobs". International Labour Review. 148 (1–2): 1–13. doi:10.1111/j.1564-913x.2009.00046.x. 
  191. ^ Thomas Piketty. Capital in the Twenty-First Century. Harvard University Press, 2014. pp. 15-16. ISBN 067443000X
  192. ^ Forbes, Kristin J. (2000). "A Reassessment of the Relationship between Inequality and Growth". The American Economic Review. 90 (4): 869–87. doi:10.1257/aer.90.4.869. JSTOR 117312. 
  193. ^ Scheidel, Walter (2017). The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century. Princeton: Princeton University Press. p. 374. ISBN 978-0691165028. 
  194. ^ Muhammad Dandume Yusuf (February 2, 2013). "Corruption, Inequality of Income and economic Growth in Nigeria". 
  195. ^ Castells-Quintana, David; Royuela, Vicente (January 4, 2017). "Tracking positive and negative effects of inequality on long-run growth". Empirical Economics: 1–30. doi:10.1007/s00181-016-1197-y. ISSN 0377-7332. 
  196. ^ "Is Inequality Necessary?" by Timothy Noah, The New Republic December 20, 2011
  197. ^ a b Claire Melamed, Kate Higgins and Andy Sumner (2010) Economic growth and the MDGs Overseas Development Institute
  198. ^ Anand, Rahul; et al. (August 17, 2013). "Inclusive growth revisited: Measurement and evolution". VoxEU.org. Centre for Economic Policy Research. Retrieved January 13, 2015. 
  199. ^ Anand, Rahul; et al. (May 2013). "Inclusive Growth: Measurement and Determinants" (PDF). IMF Working Paper. Asia Pacific Department: International Monetary Fund. Retrieved January 13, 2015. 
  200. ^ Hasmath, Reza, ed. (2015). Inclusive Growth, Development and Welfare Policy: A Critical Assessment. Routledge. ISBN 9781138840799. 
  201. ^ Ranieri, Rafael; Ramos, Raquel Almeida (March 2013). "Inclusive Growth: Building up a Concept" (PDF). Working Paper. 104. Brazil: International Policy Centre for Inclusive Growth. ISSN 1812-108X. Retrieved January 13, 2015. 
  202. ^ Bourguignon, Francois, "Growth Elasticity of Poverty Reduction: Explaining Heterogeneity across Countries and Time Periods" in Inequality and Growth, Ch. 1.
  203. ^ Ravallion, M. (2007) Inequality is bad for the poor in S. Jenkins and J. Micklewright, (eds.) Inequality and Poverty Re-examined, Oxford University Press, Oxford.
  204. ^ Elena Ianchovichina and Susanna Lundstrom, 2009. "Inclusive growth analytics: Framework and application", Policy Research Working Paper Series 4851, The World Bank.
  205. ^ Fabienne, Ilzkovitz; Dierx, Adriaan (June 19, 2016). "Competition policy and inclusive growth". VOX EU. CEPR. Retrieved June 19, 2016. 
  206. ^ a b c David T Rodda (1994). Rich Man, Poor Renter: A Study of the Relationship Between the Income Distribution and Low Cost Rental Housing (Thesis). Harvard University. 
  207. ^ Vigdor, Jacob (2002). "Does Gentrification Harm the Poor?". Brookings-Wharton Papers on Urban Affairs. 
  208. ^ Matlack, Janna L.; Vigdor, Jacob L. (2008). "Do rising tides lift all prices? Income inequality and housing affordability". Journal of Housing Economics. 17 (3): 212–24. doi:10.1016/j.jhe.2008.06.004. 
  209. ^ (cited in Matlack Do Rising Tides Lift All Prices? Income Inequality and Housing Affordability, 2006)
  210. ^ Pushed Out: The Hidden Costs of Gentrification: Displacement and Homelessness (PDF) (Report). Institute for Children and Poverty. 2009. Archived from the original (PDF) on August 6, 2013. 
  211. ^ Milo Vandemoortele 2010. Equity: a key to macroeconomic stability. London: Overseas Development Institute
  212. ^ Slater, John (January 19, 2013). "Annual income of richest 100 people enough to end global poverty four times over". Oxfam. Retrieved September 20, 2014. 
  213. ^ Khazan, Olga (January 20, 2013). "Can we fight poverty by ending extreme wealth?". Washington Post. Retrieved September 20, 2014. 
  214. ^ BBC Staff (January 18, 2013). "Oxfam seeks 'new deal' on inequality from world leaders". BBC News. Retrieved September 20, 2014. 
  215. ^ Jared Bernstein (January 13, 2014). Poverty and Inequality, in Charts. The New York Times Retrieved September 20, 2014.
  216. ^ Elise Gould (January 15, 2014). No Matter How We Measure Poverty, the Poverty Rate Would Be Much Lower If Economic Growth Were More Broadly Shared. Economic Policy Institute. Retrieved September 20, 2014.
  217. ^ "Unexpected connections: Income inequality and environmental degradation". shapingtomorrowsworld.org. 
  218. ^ Shafik, Nemat (1994). "Economic development and environmental quality: an econometric analysis". Oxford Economic Papers. 46: 757–73. JSTOR 2663498. 
  219. ^ Baland, J.-M., Bardan, P., & Bowles, S. (Eds.). (2007). Inequality, cooperation, and environmental sustainability. Princeton: Princeton University Press.[page needed]
  220. ^ Boyce, J. K. (1994). "Inequality as a cause of environmental degradation". Ecological Economics. 11: 169–78. doi:10.1016/0921-8009(94)90198-8. 
  221. ^ WWF's sustainability and equality paper
  222. ^ "WWF – Living Planet Report". panda.org. 
  223. ^ Clemente, Jude. "Urbanization: Reducing Poverty and Helping the Environment". Forbes. Retrieved 2018-02-19. 
  224. ^ "Would reducing global poverty help the planet? | 1 Million Women". Retrieved 2018-02-19. 
  225. ^ Lahtinen, Hannu; Wass, Hanna; Hiilamo, Heikki (2017). "Gradient constraint in voting: The effect of intra-generational social class and income mobility on turnout". Electoral Studies. 45: 14–23. doi:10.1016/j.electstud.2016.11.001. 
  226. ^ Alesina, Alberto; Perotti, Roberto (1996). "Income distribution, political instability, and investment". European Economic Review. 40 (6): 1203–28. doi:10.1016/0014-2921(95)00030-5. 
  227. ^ Ezcurra, Roberto; Palacios, David (2016). "Terrorism and spatial disparities: Does interregional inequality matter?". European Journal of Political Economy. 42: 60–74. doi:10.1016/j.ejpoleco.2016.01.004. 
  228. ^ Houle, Christian (2016). "Why class inequality breeds coups but not civil wars". Journal of Peace Research. 53 (5): 680–95. doi:10.1177/0022343316652187. 
  229. ^ "It's Harder Than It Looks To Link Inequality With Global Turmoil". FiveThirtyEight. Retrieved January 8, 2016. 
  230. ^ Milanovic, Branko (2016). Global Inequality: A New Approach for the Age of Globalization. Harvard University Press. p. 96. ISBN 978-0674737136. 
  231. ^ a b c d Starmans, Christina; Sheskin, Mark; Bloom, Paul (2017). "Why people prefer unequal societies". Nature Human Behaviour. 1 (4): 0082. doi:10.1038/s41562-017-0082. 
  232. ^ Barbara Goodwin. Using Political Ideas. West Sussex, England, UK: John Wiley & Sons, Ltd., 2007. p. 107.
  233. ^ Oldrich Kyn. "The Normative View of Marxian Theory on Income Distribution under Socialism". Retrieved November 30, 2013. 
  234. ^ Landes, David. S. (1969). The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to the Present. Cambridge, New York: Press Syndicate of the University of Cambridge. ISBN 0-521-09418-6. 
  235. ^ Cowen, Tyler (July 19, 2014). "Income Inequality Is Not Rising Globally. It's Falling". New York Times. Retrieved July 26, 2014. 
  236. ^ New Statesman – NS Essay – 'Accumulation of wealth is unjust where it arises not from hard work and risk-taking enterprise, but from brute luck factors such as returns from property. Inheritance is a form of brute-luck inequality'.
  237. ^ John Nichols (December 2, 2013). Pope: "King Money" Culture is Hurting Young and Old. Moyers & Company. Retrieved December 8, 2013.
  238. ^ Andrew Brown (April 28, 2014). Pope Francis condemns inequality, thus refusing to play the game. The Guardian. Retrieved May 27, 2014.
  239. ^ Inequality and Happiness: Are Europeans and Americans Different? Archived February 1, 2014, at the Wayback Machine.
  240. ^ The relation between economic inequality and political inequality is explained by Robert Alan Dahl in the chapters The Presence of a Market Economy (p. 63), The Distribution of Political Resources (p. 84) und Market Capitalism and Human Dispositions (p. 87) in On Political Equality, 2006, 120 pages, Yale University Press, ISBN 978-0-300-12687-7
  241. ^ a b Amartya Sen (1999). "Poverty as Capability Deprivation". Development as Freedom. New York: Anchor Books. 
  242. ^ Fukuda-Parr 2003.
  243. ^ [1], UNDP (1990) Human Deuelopment Report, Oxford University Press, New York
  244. ^ Deneulin, Séverine; Alkire, Sabina (2009), "The human development and capability approach", in Deneulin, Séverine; Shahani, Lila, An introduction to the human development and capability approach freedom and agency, Sterling, Virginia Ottawa, Ontario: Earthscan International Development Research Centre, pp. 22–48, ISBN 9781844078066 
  245. ^ Tritch, Teresa (March 7, 2014). "F.D.R. Makes the Case for the Minimum Wage". New York Times. Retrieved March 7, 2014. 
  246. ^ Moyes, P. A note on minimally progressive taxation and absolute income inequality Social Choice and Welfare, Volume 5, Numbers 2–3 (1988), 227–34, doi:10.1007/BF00735763. Accessed: May 19, 2012.
  247. ^ Pickett and Wilkinson, The Spirit Level: Why More Equal Societies Almost Always Do Better, 2011
  248. ^ Duncan, Denvil, Klara Sabirianova Peter (October 2012). "Unequal Inequalities: Do Progressive Taxes Reduce Income Inequality?" (PDF). Institute for the Study of Labor. 
  249. ^ Wealth Gap Widens In Rich Countries As Austerity Threatens To Worsen Inequality: OECD. The Huffington Post. Retrieved May 14, 2013
  250. ^ Annie Lowrey (April 16, 2012). For Two Economists, the Buffett Rule Is Just a Start. The New York Times. Retrieved August 17, 2013.
  251. ^ Nader, Ralph (April 18, 2013). Time for a Sales Tax on Wall Street Financial Transactions. The Huffington Post. Retrieved June 5, 2013.
  252. ^ 1% Wall Street Sales Tax. UFAA.
  253. ^ Erika Eichelberger (October 30, 2013). Economists to Congress: It's Time for a "Robin Hood Tax" on the Rich. Mother Jones. Retrieved November 15, 2013.
  254. ^ "The logical floor". The Economist. 
  255. ^ Konczal, Mike (March 30, 2013). "How an anti-rentier agenda might bring liberals, conservatives together". Washington Post. Retrieved April 6, 2013. 
  256. ^ Grusky, David B. (March–April 2013). "What to Do about Inequality". Boston Review. Retrieved April 6, 2013. 
  257. ^ a b Acemoglu, Daron; Robinson, James A.; Verdier, Thierry (May 26, 2017). "Asymmetric Growth and Institutions in an Interdependent World". Journal of Political Economy: 000–000. doi:10.1086/693038. ISSN 0022-3808. 
  258. ^ Lane, Kenworthy (2015). Social Democratic America. USA: Oxford University Press. pp. 88–93. ISBN 978-0190230951. 
  259. ^ Bradley, David; Huber, Evelyne; Moller, Stephanie; Nielsen, François; Stephens, John D. (2011). "Distribution and Redistribution in Postindustrial Democracies". World Politics. 55 (2): 193–228. doi:10.1353/wp.2003.0009. 
  260. ^ Huber, Evelyne; Nielsen, François; Pribble, Jenny; Stephens, John D. (2006). "Politics and Inequality in Latin America and the Caribbean". American Sociological Review. 71 (6): 943–63. doi:10.1177/000312240607100604. JSTOR 25472438. 
  261. ^ Keller, Katarina R.I. (2010). "How Can Education Policy Improve Income Distribution?: An Empirical Analysis of Education Stages and Measures on Income Inequality". The Journal of Developing Areas. 43 (2): 51–77. doi:10.1353/jda.0.0052. JSTOR 40376250. 
  262. ^ Clark, J. R.; Lawson, Robert A. (2008). "The Impact of Economic Growth, Tax Policy and Economic Freedom on Income Inequality". The Journal of Private Enterprise. SSRN 2566842 Freely accessible. 
  263. ^ García-Peñalosa & Turnovsky 2007.
  264. ^ Alfani, Guido (January 15, 2017). "The top rich in Europe in the long run of history (1300 to present day)". VoxEU.org. Retrieved January 16, 2017. 
  265. ^ Scheidel, Walter (February 23, 2017). "Inequality Has Historically Been Leveled Only By Terrible Violence And Upheaval". The Huffington Post. Retrieved March 30, 2017. 
  266. ^ Taylor, Matt (February 22, 2017). "One Recipe for a More Equal World: Mass Death". Vice. Retrieved April 7, 2017. 
  267. ^ Porter, Eduardo (December 6, 2016). "A Dilemma for Humanity: Stark Inequality or Total War". The New York Times. Retrieved March 30, 2017. 
  268. ^ Scheidel, Walter (2017). The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century. Princeton: Princeton University Press. pp. 438 & 444. ISBN 978-0-691-16502-8. 

Further reading[edit]

Books
Articles

External links[edit]

Retrieved from "https://en.wikipedia.org/w/index.php?title=Economic_inequality&oldid=851365121"