ABSTRACT
Analysis of inequality, like most economic issues, involves both positive and normative questions. While the discussion of inequality focuses mainly on positive analysis, this chapter considers the ethical and policy debates that are often driven by strongly held values. It explores income inequality trends in the United States and discusses some additional perspectives on inequality, including inequality of wealth and how inequality is related to race, age, education, and other factors. The chapter also considers the role of education in reducing inequality. Inequality needs to be addressed somewhat differently in developed and developing countries. The chapter also focuses on inequality policies in developed countries, mainly the United States. It briefly addresses inequality in developing countries as well. Three basic policy approaches to reducing inequality are considered: tax and transfer policies, wage policies, and public spending and regulatory policies.
