INCOME DISTRIBUTION: MAIN TRENDS AND PROBLEMS

Abstract

Income inequality refers to differences in how economic resources are distributed among the population. In this context, household disposable income is measured for a particular year and includes earnings from employment and self-employment, capital returns, and public cash transfers. However, taxes and social security contributions paid by households are deducted. Inequality is also described as the gap between the rich and the poor, differences in economic well-being, wealth disparity, or the wealth gap (OECD). In recent years, inequality has become an important issue for policymakers and researchers, as high levels of disparity are associated with social unrest, political polarization, and mistrust. Most research in this area focuses on disparities arising from the distribution of resources generated within the economy and how these resources are allocated among households. This article examines recent trends in inequality by analyzing its causes and consequences, the main factors driving its growth, and some of its broader implications. Several key factors contributing to rising inequality can be identified, including technological progress, trade globalization, capital concentration, the cyclical nature of production, and demographic and social factors. Inequality has a number of negative social and economic consequences. In particular, it can reduce the size of the middle class and undermine political and social stability. In most countries, disparities have generally been increasing, raising concerns about the sustainability of economic growth. The possibility of achieving inclusive growth has also been called into question.