Key references: Inequality

Clements, B., Mooij, R., Gupta, S., & Keen, M. (Eds.) (2015). Inequality and fiscal policy. Washington, DC: IMF.
How can governments address rising inequality while simultaneously promoting economic efficiency and more robust economic growth? Fiscal policy is the government’s most powerful tool for addressing inequality. It affects households’ consumption directly (through taxes and transfers) and indirectly (via incentives for work and production and the provision of public goods and services such as education and health). Growth and equity are not necessarily at odds; with the appropriate mix of policy instruments and careful policy design, countries can in many cases achieve better distributional outcomes and improve economic efficiency. Country studies (on the Netherlands, China, India, Republic of Congo, and Brazil) demonstrate the diversity of challenges across countries and their differing capacity to use fiscal policy for redistribution.

Coudouel, A., Hentschel, J. S., & Wodon, Q. T. (2002). Poverty measurement and analysis. In The poverty reduction strategy paper sourcebook. Washington, DC: World Bank.
How can you analyse well-being? This chapter provides an introduction to poverty, inequality, and vulnerability analysis and a guide to resources, tools and data sources. It focuses mainly on income and consumption and refers only casually to the other multidimensional aspects of extreme poverty and social exclusion. Poverty profiles are useful for comparing poverty between groups. Different rounds of surveys are useful for comparing poverty over time. Methods of analysing well-being must always be adapted to country circumstances and the availability of data.

Kabeer, N. (2010). Can the MDGs provide a pathway to social justice? The challenge of intersecting inequalities. Brighton: Institute of Development Studies.
What impact do intersecting inequalities have on the achievement of the MDGs? The focus on average progress disguises a picture of uneven achievement that is characterised by deep disparities between social groups. The socially excluded sections of the poor are systematically left out of, or left behind from, their countries’ progress. The report suggests key concerns, principles and recommendations that can provide the basis for continued efforts to tackle social exclusion.

Milanovic, B. (2016). Global inequality: A new approach for the age of globalization. Harvard University Press.
What are the dynamics that drive inequality on a global scale? Who has benefited most from globalisation, who has been held back, and what policies might tilt the balance toward economic justice? Vast data sets and cutting-edge research explain the benign and malign forces that make inequality rise and fall within and among nations. Inequality moves in cycles, fueled by war and disease, technological disruption, access to education, and redistribution. The recent surge of inequality in the West has been driven by the revolution in technology. Even as inequality has soared within nations, it has fallen dramatically among nations, as middle-class incomes in China and India have drawn closer to the stagnating incomes of the middle classes in the developed world. A more open migration policy would reduce global inequality even further.

Ortiz, I., & Cummins, M. (2011). Global inequality: Beyond the bottom billion – A rapid review of income distribution in 141 countries. UNICEF.
What does global inequality look like? This working paper provides an overview of global, regional and national income inequalities based on the latest distribution data from the World Bank, UNU-WIDER and Eurostat. The extreme inequality in the distribution of the world’s income brings into question the current development model. Inequality slows economic growth, results in health and social problems and generates political instability. The paper provides income distribution and Gini Index data from 1990-2008 for 136 countries.

Ostry, J. D., Berg, A., Tsangarides, C. G. (2014). Redistribution, inequality, and growth (IMF staff discussion note SDN/14/02). Washington, DC: IMF.
What are the links between rising inequality and the fragility of growth? Inequality can undermine progress in health and education, cause investment-reducing political and economic instability, and undercut the social consensus required to adjust in the face of shocks. It, therefore, tends to reduce the pace and durability of growth. Based on calculations of redistributive transfers for a large number of country-year observations, this paper finds that: more unequal societies tend to redistribute more; lower net inequality (after taxes and transfers) is robustly correlated with faster and more durable growth, for a given level of redistribution; and that redistribution appears generally benign in its impact on growth – only in extreme cases is there some evidence that it may have direct negative effects on growth. We should be careful not to assume that there is a big trade-off between redistribution and growth.

Piketty, T. (2014). Capital in the twenty-first century. London: The Belknap Press of Harvard University Press.
What are the grand dynamics that drive the accumulation and distribution of capital? Analysing data for twenty countries going back as far as the eighteenth century, this book suggests reasons for the inequalities that exist today. The tendency of returns on capital to exceed the rate of economic growth threatens to generate extreme inequalities that stir discontent and undermine democratic values. Political action could curb the further development of these inequalities.

Stewart, F. (2010). Horizontal inequalities as a result of conflict: A review of CRISE findings (Overview, No. 1). Oxford: Centre for Research on Inequality, Human Security and Ethnicity.
Why are some multi-ethnic countries peaceful while others experience violent conflict? The presence of large horizontal inequalities, or inequalities among salient identity groups, increases the risk of violent conflict. Horizontal inequalities have multiple and reinforcing disadvantages. Violent conflict is most likely to occur where economic, social, political and cultural status horizontal inequalities occur simultaneously. In these situations, group leaders, who face political exclusion, and their potential followers, who see themselves as treated unequally in relation to assets, jobs and social services, are likely to be motivated to mobilise and possibly engage in violence. The report identifies policies to correct these horizontal inequalities, which should be prioritised in multi-ethnic societies, especially in post-conflict contexts.

UNDP. (2013). Humanity divided: Confronting inequality in developing countries. New York: UNDP. Inequality of what? Inequality between whom? Why does national inequality matter? This report shows that inequality has been jeopardising economic growth and poverty reduction. It has stalled progress in health, education and nutrition and limited opportunities and access to economic, social and political resources. Inequality can undermine social cohesion and increase political and social tensions, which could lead to instability and conflict. The report concludes with a comprehensive policy framework to confront inequality in developing countries.

UNICEF, & UN Women. (2013). Global thematic consultation on the post-2015 development agenda: Addressing inequalities – Synthesis report of global public consultation. UNICEF & UN Women.
Why do inequalities exist? How can we tackle them? This report draws on an extensive consultation process with civil society organisations, UN agencies and academic institutions. Inequalities are a global challenge. They have deep consequences for everyone in society. The poor often face discrimination, stigma and negative social stereotypes that reduce their social participation, opportunities for employment and political support for targeted measures. People with disabilities experience more deprivations, with greater severity, than people without disabilities in various areas of life. Women face discrimination in most areas of their lives. The rural and urban poor face various different inequalities including access to services and livelihoods. Older people experience discrimination, which restricts their access to resources and services. Children and youth face inequalities because of their age. Identity-based discrimination means that the poorest and most marginalised in any given state are often ethnic minorities, indigenous peoples and religious groups. Prejudice, negative stereotypes and intolerance against gay, lesbian, bisexual, and transgender people often results in violence and discrimination against them. Non-citizens and migrants commonly face legal discrimination and limited opportunities. Addressing inequalities depends on tackling structural barriers, creating conditions in all countries where all people are able to enjoy equality of rights and opportunity. Actions to tackle inequalities include: legal, social and economic policy; protection from discrimination, exploitation and harm; levelling-up measures; and capacity to claim.

UNICEF, UN Women, UNDP & OHCHR. (2014). TST issues brief: Promoting equality, including social equity. UNICEF, UN Women, UNDP & OHCHR.
Why do inequalities matter and how can equality be promoted in the post-2015 development agenda? Inequalities harm not only the most deprived people, but also their wider societies, by threatening the stability and sustainability of economic growth; depriving countries of productive human capital and entrepreneurial talent; undermining the ability of people living in extreme poverty to contribute to economic growth and environmental conservation; and reducing social cohesion and mutual trust as a basis for economic, social and political contracts. This Brief addresses the high inequalities that continue to exist and suggest actions to combat them in the post-2015 agenda.

Wilkinson, R., & Pickett, K. (2010). The spirit level: Why equality is better for everyone. (Rev ed.) London: Penguin.
What impact does inequality have on society? More unequal societies are bad for almost everyone in them, rich as well as poor. Almost every modern social and environmental problem – ill health, lack of community life, violence, drugs, obesity, mental illness, long working hours, and large prison populations – is likely to occur in a less equal society. This book suggests an approach to improving everyone’s quality of life by making societies more equal.

World Bank. (2006). World development report 2006: Equity and development. Washington, DC: World Bank.
What is the relationship between equity and development? Equity means that individuals should have equal opportunities to pursue a life of their choosing and be spared from extreme deprivation. Institutions and policies that promote a level playing field — where all members of society have similar chances to become socially active, politically influential, and economically productive — contribute to sustainable growth and development. Greater equity is good for poverty reduction through potential beneficial effects on aggregate long-run development and through greater opportunities for poorer groups. Inequality traps that result from overlapping political, social, cultural, and economic inequalities stifling mobility and equality of opportunity are wasteful and inimical to sustainable development and poverty reduction. Equitable policies are more likely to be successful when levelling of the economic playing field is accompanied by similar efforts to level the domestic political playing field and introduce greater fairness in global governance. The report discusses the role of public action in levelling the economic and political playing field by: investing in human capacities; expanding access to justice, land, and infrastructure; promoting fairness in markets; and promoting greater global equity, in access to markets, resource flows, and governance.

World Bank. (2012). World development report 2012: Gender equality and development. Washington, DC: World Bank.
What progress has been made towards gender equality? This report focuses on the economics of gender equality and development, and points to four priority areas for action. There have been dramatic improvements in some aspects of the lives of girls and women, yet progress towards gender equality has been limited in some areas. These patterns of progress and persistence in gender equality matter, for both development outcomes and policymaking. Economic development is not enough to shrink all gender disparities – corrective policies that focus on persisting gender gaps are essential.

World Bank. (2013). Inclusion matters: The foundation for shared prosperity. Washington, DC: World Bank.
Why does inclusion matter? How can one know when social inclusion is achieved? Inclusion matters because it is the foundation for shared prosperity. Social exclusion is simply too costly—socially, politically, and economically. Excluded groups exist in all countries and are consistently denied opportunities. Intense global transitions are leading to social transformations that create new opportunities for inclusion as well as exacerbating existing forms of exclusion. Social and economic transformations affect people’s attitudes and perceptions. It is important to pay attention to these attitudes and perceptions as they affect how individuals and groups are treated, both by other members of the society and by the state. Social inclusion can be enhanced by improving people’s ability, opportunity, and dignity. Abundant evidence shows that social inclusion can be planned and achieved. The report provides a comprehensive examination of inclusion and a framework to help advance the social inclusion agenda.

Further reading