ABSTRACT
We begin this chapter with a brief discussion of why economic inequality is problematic, followed by a review of inequality trends around the world. Whereas income inequality has increased within most countries since the 1970s, global income inequality has remained stable during most of the twentieth century and has started to decline in the last few decades. This latter trend is driven by reductions in the inequality between countries, and global poverty has dropped accordingly. However, extreme poverty remains persistent in many parts of the world and we discuss several theories to explain why this is the case. In addition, we examine what is happening in terms of income and wealth at the other end of the distribution, to the so-called “top one percent”. Next, we consider the relationships between inequality, national income and economic growth. We demonstrate that it is in this regard important to distinguish between comparisons of different countries at a single point in time versus comparisons within countries over time. We also address the impact of inequality on the well-being of individuals and society more generally, concentrating on the influence of inequality on health as well as intergenerational social mobility.
