How to Deal with Inequality: What Policymakers Should Know

Abstract

High and rising levels of inequality have become a hot topic of discussion in both industrialized and developing countries in recent years. In this article, the author focuses on four different aspects. The first section provides a brief commentary on how inequality has moved to the center stage and different elements that drove this process in industrialized and developing countries. The second section presents an assessment of the available data that suggest what has happened to income distribution in a select group of industrialized and developing countries. The third section discusses some of the determinants of income distribution, which we need to understand if we want to reduce the degree of inequality. The fourth section discusses the scope for corrective action in this area with special reference to emerging market countries.