short essay about global inequality

The future is equal

What is global inequality?

An unequal world makes ending poverty harder—and puts the chance at a good life out of reach for too many people.

Imagine lining up everyone on the planet by their wealth and status. On one end, a small group of individuals that have few, if any, barriers to living a full and healthy life. On the other, a larger group of people who find themselves excluded from the possibility to do the same.

Understanding global inequality starts with recognizing that not everyone enjoys the same rights, treatment, and opportunities. If you face generational poverty or gender discrimination, these barriers to equality can have profound implications for the kind of life you want to live.

At Oxfam, our mission is to fight global inequality to end poverty and injustice. So we’re going to explore global inequality, step by step: What is it; how is it measured (and do different ways of measuring it matter); and how we can reduce global inequality toward ending poverty and injustice.

So what is global inequality?

Global inequality is the unequal distribution of resources, opportunities, and power that shape well-being among the 8 billion individuals on our planet. Distinct from inequality within a country or between countries, global inequality is one way of understanding the different lived experiences of our fellow humans, no matter where they live.

Notably, global inequality is worse than inequality within countries. And economic inequality—the unequal distribution of income—is one strikingly visible dimension of global inequalities in well-being.

• In the early 1800s, individuals worldwide had more similar living standards, and differences in wealth and income were closer.
• Global inequality grew substantially after the Industrial Revolution, sparking rapid income growth in Western Europe, the US, Australia, Canada, and New Zealand as compared with incomes in other countries.
• Fast forward to today, the 10 richest men in the world own more than the bottom 3.1 billion people.

Economic inequality often interacts with other kinds of disadvantage that result from power imbalances in society worldwide. For example, the absence of women’s voices in decision-making spaces or a caste system that discriminates against sectors of society with lower status reflect cultural, political, and social inequalities that undermine people’s well-being.

• Nobel Prize-winning economist Amartya Sen calls the array of things that make up well-being “capabilities.”
• Capabilities are essential “freedoms” that make it possible to live a full and healthy life. They come from having adequate resources and the ability to use those resources with ease and purpose.

In other words: Global inequality stems not just from what people have and don’t have—but what they're able to do with what they have.

How is global inequality measured and does how you measure it matter?

Global inequality can be measured and understood in many ways. Some economic measures focus on the share of income that middle-income groups of people enjoy over time, while others look at the growing wealth among the richest in society.

• According to the World Bank, global inequality is on the rise for the first time in decades because the poorest 40 percent of the world lost twice as much income as the wealthiest 20 percent during the global pandemic. It's the largest increase since 1990.
• But Oxfam considers an alternative measurement: the ratio of income share held by the richest 5 percent as compared with the poorest 40 percent. This approach tries to better capture the extreme concentration of wealth and income.

This widening inequality is a major risk to human flourishing. Unequal treatment breeds distrust, and countries with high inequality grow more slowly—closing off opportunities for economic advancement. Measures that focus on extreme wealth and income also make it easier to see how structural policy choices widen gender and racial inequalities.

So what do we learn by taking a closer look at the growing gap between the rich and the poor?

• 252 men have more wealth than all 1 billion women and girls in Africa, Latin America, and the Caribbean, combined.
• In the US, 3.4 million Black Americans would be alive today if their life expectancy was the same as White people’s. Before COVID-19, that alarming number was already 2.1 million.
• Twenty of the richest billionaires are estimated, on average, to be emitting as much as 8,000 times more carbon than the billion poorest people—increasing the risk of climate-driven humanitarian crisis.

“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little,” said former US president Franklin Delano Roosevelt.

How can we reduce global inequality? What could it mean for ending poverty and injustice?

We all have a role to play in creating a more equal future, but governments and the private sector must be responsive to the perspectives and solutions of those most affected by poverty to reduce global inequality in two main areas.

• Corporate board rooms, international climate conferences, and national governments must be accountable to women, workers, and representatives of marginalized communities. When these groups gain power and political voice, they better influence these decision-making spaces, defining their own way out of poverty and tackling the factors that keep people poor.
• Through foreign aid that supports local people and institutions as well as financial commitments that help climate-vulnerable countries tackle the climate crisis, rich industrialized countries have a central role to play in making critical investments to reduce global inequality.
• By making billionaires and giant corporations pay their fair share of taxes, governments can direct more resources to strengthen health systems, lift children out of poverty, and grow more inclusive economies.

Where you’re born or live shouldn’t determine your future, but for too many people, inequality squanders human potential. We need to clearly see the fundamental unfairness and dangers of highly unequal societies, and we must take action to help more people enjoy the freedoms to live a full and healthy life.

While Oxfam has long focused on global inequality, inequality within the US remains a huge challenge. For workers in many states across the South, low wages, a lack of workplace protections, and prohibitions against organizing unions are worsening inequality.

But there’s hope for the future. For the last five years, Oxfam has produced the Best States to Work Index to track how states protect, support, and pay workers. Workers are demanding and winning change, organizing to form new unions, elect more helpful lawmakers, and press for changes in state laws.

Where does your state rank?

Find out in our 2022 Best and Worst States to Work in America rankings, as featured on Season 2, Episode 3 of "The Problem with Jon Stewart" on Apple TV+.

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Best and Worst States to Work in America

Click here for your special download link . Thank you for your interest in our Best States to Work rankings. We're excited to keep you informed about ways you can partner with Oxfam to fight global inequality to end poverty and injustice.

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How can the world address inequality? 7 experts explain

Leave no one behind. Image:  Priscilla Du Preez/Unsplash

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Listen to the article

• The COVID-19 pandemic has exacerbated socioeconomic inequalities.
• Mitigating inequality requires a mix of bottom-up and top-down changes that address the underlying social and economic systems.
• Seven experts shine a light on creating a future that leaves no one behind.

The COVID-19 pandemic has exacerbated socioeconomic inequalities within and across countries. The policy responses designed to mitigate them in the form of either relief and recovery packages or welfare protections have mostly proved to be short-term fixes. In the long-term, however, the distributional consequences of the pandemic between and within countries, as in during previous pandemics and recessions, are bound to widen inequality.

According to the World Inequality Database 2020 update, Latin America and the Middle East stand as the world’s most unequal regions, with the top 10% of the income distribution capturing 54% and 56% of the average national income respectively. Despite Gulf countries (Bahrain, Kuwait, Oman, Qatar, UAE, Saudi Arabia) having among the highest GDP per capita levels, they have also marked extreme inequality levels, with little variation since the 1990s. However, the starkest change has been the rise in concentration of incomes in the US, with the top 10% witnessing an increase from 34% to 45% of the national income between 1980 and 2019.

The data are an indicator that countries with strong investments in public services, social protection, and labour market policies have the lowest inequality levels, with Europe standing as the most equal of all regions driven by its redistribution and progressive taxation, seen in the Commitment to Reducing Inequality Index .

Have you read?

How covid deepened gender inequality - this week's radio davos podcast, 5 shocking facts about inequality, according to oxfam’s latest report, imf head: how governments can prevent widening inequality.

Looking at global inequality beyond purely from an income distribution lens, it is critical to take into consideration multidimensional factors such as social mobility, gender equality, livelihood infrastructure, technology access, the voice of civil society, privacy, social and environmental protections, progressive tax laws and labour rights when examining the how societies perform on reducing inequality and serving public interest.

The COVID crisis has forced us to reimagine our shared futures as the world attempts to rebuild. From proposals relating to basic income and collecting the tax deficit to the more emerging debate on inheritance for all , the asymmetric impact of the pandemic and divergent recovery beckon a universal call for us to build back broader .

Mitigating inequality will now demand a mix of bottom-up and top-down changes that recognize the social and economic systems aggravating inequality are a matter of choice. Where do we go from here?

We asked seven global experts from the World Economic Forum Expert Network to provide their perspective on how we can build a better future where we leave no one behind. Here’s what they said.

‘It is particularly crucial to increase the minimum wage'

Tak Niinami, Chief Executive Officer, Suntory Holdings and Senior Economic Advisor to the Prime Minister of Japan

The pandemic has made it apparent that Japan also faces the issue of inequality. A widening in the gap must be prevented by all means as it would bring social unrest and social divide. In the short-term, given Japan’s comparatively low wages, it is particularly crucial to increase the minimum wage and thoroughly implement an “equal pay for equal work” policy to bridge the gap between regular and non-regular workers.

The acceleration of redistribution of wealth is also imperative. Taxation on assets and capital gains should be increased so that this resource can be utilized to fund NPOs (nonprofit organizations) that can take measures against issues such as poverty and isolation.

Furthermore, in the long-term, I believe education is key in mitigating inequality. The widening education gap can spill over from generation to generation, creating a chain effect that must be avoided. Technology can prove to be a solution if it can be applied to ensure equal opportunities, enabling high-quality education to anyone and anywhere, no matter where you live.

‘ Well-funded and quality universal healthcare must be the legacy of the pandemic ’

Deepak Xavier, Head of Inequality Advocacy and Campaigns, Oxfam International

The world risks the greatest rise of inequality since records began , and today it is inequality that perpetuates COVID-19, which is ending so many lives. The grotesque inequality in accessing healthcare is proving fatal. To be without a hospital bed or medical oxygen in the face of a pandemic is frightening enough. However, for most of the world that has long been the case. Pre-pandemic 10,000 people were dying daily due to lack of access to healthcare.

Progress on universal healthcare is achievable – as countries such as Costa Rica have shown . Implementing a fair and progressive tax system to avoid concentration of wealth to the top 10% is one way to provide a fiscal boost. A 0.5% extra tax on the wealth of the richest 1% alone could raise $418bn each year which could be redistributed towards resilient healthcare systems. Issuing US$1 trillion of IMF’s Special Drawing Rights (SDRs) global reserve asset would dramatically increase the funds available to countries – for example, the Ethiopian government will have access to an additional $630 million — enough to increase its health spending by 45%.

Well-funded and quality universal healthcare must be the legacy of the pandemic: to save lives and better tackle future pandemics.

'Support our people outside of the "nine to five".'

Leslie Parker, Partner and Member of the Board of Directors, Kearney

It used to be that there was very little crossover between our work and personal lives. Since COVID, that has changed. The new work-from-home model has given us intimate access to our colleagues’ personal lives – and surfaced a whole new set of inequalities.

We see family members juggling caring responsibilities with the demands of their jobs. We see people who live alone, who might not physically encounter another human being that week. We see housemates sitting three to a table, trying to work at the same time. And we see laptops propped on kitchen counters, stacks of boxes and pairs of knees, as people search for an elusive quiet space or change of scenery.

The ability to work from home is an incredibly privileged position for many. But with working patterns and norms changed beyond all recognition, we need policies that take on these and other new inequalities – including lack of choice over working location – into account. It’s not enough to dish out some grants for home office equipment. What about some let-up from home schooling or eldercare, or help to tackle loneliness? Why not help our teams create better connections with one another that can offer more than the virtual happy hour and more time behind a laptop? We need to go beyond one-dimensional Diversity, Equity, Inclusion programmes and policies, and really support our people outside of the ‘nine to five’.

At Kearney we have taken a first step by asking employees around the world to tell us what would improve their lives and how we can help as leaders. We are already seeing wellbeing, both physical and mental, as a major theme. We introduced more mental and physical health programmes with free classes available to employees, redesigned our future work model strategies to allow for flexibility of working hours and location (no longer adopting five-days-a-week office model), offered an option to go to co-working spaces to employees whose current situation is not supportive of their work or mental health and improved coaching and mentoring guidelines in the absence of in-person onboarding and support.

‘ Promote more transparent and accountable systems ’

Ibrahima Hathie, Distinguished Fellow, Initiative Prospective Agricole et Rurale (IPAR), Senegal and Southern Voice network member

Sustainable Development Goal 10 of the 2030 Agenda seeks to “reduce inequality within and among countries”. Yet, the goal’s targets and indicators focus on horizontal inequality and exclu­sion of the vulnerable and marginalized population from opportunities. The United Nations’ overarching principle of “ Leave No One Behind ” reflects this orientation and calls for a transformative agenda. However, it fails to address deep-rooted social, economic, and political systemic problems that preserve and often amplify vertical inequalities.

A path to achieving this must seek to reduce the political influence of elites in the formulation and implementation of public policies. It would promote more transparent and accountable systems. Tackling inequalities between countries is also imperative if we are to face the consequences these have on the most vulnerable in developing countries. Addressing overlapping disadvantages through a comprehensive development strategy can be an excellent response to horizontal inequalities. Vertical inequalities require more: progressive economic institutions with pro-poor taxation, investment, and trade.

In Senegal, for example , the government should choose and invest heavily in food value chains, funding of research of these value chains, training of family farmers, agricultural entrepreneurs, technicians, and engineers and introduce multisector governance to ensure smooth coordination to achieve the goals set out by the Malabo Declaration . This would lead to increased industrial development, improved health and nutrition, and decent and abundant jobs for young people and women.

‘The basic fundamentals of knowledge creation and collaboration must be addressed’

Marie McAuliffe, Head, Migration Research Division, International Organization for Migration

In addition to measures on improving social protection of migrant workers, reducing costs of international remittance transfers, and bolstering migrants' rights throughout the migration process, the fundamentals of knowledge creation and collaboration must be addressed. Affected communities impacted by increasing inequality must be part of processes aimed at formulating effective responses.

Developing country experts and research institutions must be able to meaningfully participate in researching, proposing, designing, and evaluating solutions according to their priorities and needs. A much greater focus on leveraging opportunities to undertake participatory and collaborative research with (and for) marginalized populations is needed. Only then can the programmatic and policy responses designed to reduce inequality globally be truly sustainable.

We advocated this approach as part of consultations on the UN Research Roadmap on COVID-19, which makes a strong case for participatory research to support long-term global transformations. In 2017, IOM invited the world’s leading migration researchers from around the world to join in sharing their expertise and knowledge in support of the 2018 global compact on safe, orderly and regular migration. As a consequence, the resolution on the Global Compact for Safe, Orderly and Regular Migration was adopted by the United Nations General Assembly in 2018.”

‘Increase public investments in the formal and informal care economies’

Susan Ferguson, Women Representative for India, UN Women

The COVID-19 crisis in India has impacted millions, not only those suffering from the disease, but also those who care for them. As always, women have taken on the heavy burden of caring for the sick and finding ways to meet their family’s basic needs. A recent Oxfam report shows that Indian women and girls put in 3.26 billion hours of unpaid care work every day — a contribution of at least ₹19 trillion a year to the Indian economy.

Yet in India, duties performed at home have historically not been considered “work,” because of unequal gender and caste norms. And now, with after the second wave of COVID-19, the combination of illness, unpaid care, economic slowdown and lack of access to financing for female entrepreneurs means that many women are unable to return to work.

If these trends aren’t reversed, they will have a devastating impact on the economy and further exacerbate gender inequality. For this generation of women to emerge relatively unscathed from this pandemic and be able to return to the workforce, we must invest seriously in education and livelihoods of women and girls in India. UN Women’s Second Chance Education programme is a prime example of how we can and must focus on women’s livelihoods right now, before the equality gaps widen even more. Another way to mitigate the inequality crisis would be to increase public investments in the formal and informal care economies and tap into the job creation potential of the care economy.

In the end, it will come down to changing attitudes. Whether it’s at home, in the office or in the fields, we must stop taking women’s work for granted.

Read more here .

Don’t use the pandemic as a justification to discriminate and exclude

Melody Patry, Advocacy Director, Access Now

From Singapore to Jamaica, governments are scrambling for solutions to help the world return to a pre-virus normality. Vaccine certificates — or “passports” — that record and authenticate vaccination statuses, however, are short-term fixes that potentially pose long-term risks to human rights. These fast-tracked stopgaps are a blueprint for exclusion and discrimination, and present serious and disproportionate threats to the privacy and security of millions of people.

COVID-19 and its reverberations already impact our most vulnerable and underserved individuals and communities — from limited health care, to increased economic instability — we cannot allow techno-solutionism to exacerbate the divide further.

Global leaders, and their industry counterparts, must stop, recalibrate, and ensure technology plays a positive, cornerstone role in pandemic recovery. As laid out by U.N. Special Procedures on the eve of RightsCon 2021 , "we need to act together to embrace the fast-pace expansion of digital space and technological solutions that are safe, inclusive and rights-based."

World Economic Forum Strategic Intelligence , in partnership with the Institute for Global Prosperity , University College London (UCL) launched the transformation map on Inequality .

The experts cited in this article are part of the World Economic Forum Expert Network .

Rising inequality affecting more than two-thirds of the globe, but it’s not inevitable: new UN report

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Inequality is growing for more than 70 per cent of the global population, exacerbating the risks of divisions and hampering economic and social development. But the rise is far from inevitable and can be tackled at a national and international level, says a flagship study released by the UN on Tuesday.

The World Social Report 2020, published by the UN Department of Economic and Social Affairs (DESA), shows that income inequality has increased in most developed countries, and some middle-income countries - including China, which has the world’s fastest growing economy.

The challenges are underscored by UN chief António Guterres in the foreword, in which he states that the world is confronting “the harsh realities of a deeply unequal global landscape”, in which economic woes, inequalities and job insecurity have led to mass protests in both developed and developing countries.

 “Income disparities and a lack of opportunities”, he writes, “are creating a vicious cycle of inequality, frustration and discontent across generations.”

‘The one per cent’ winners take (almost) all

The study shows that the richest one per cent of the population are the big winners in the changing global economy, increasing their share of income between 1990 and 2015, while at the other end of the scale, the bottom 40 per cent earned less than a quarter of income in all countries surveyed.

One of the consequences of inequality within societies, notes the report, is slower economic growth. In unequal societies, with wide disparities in areas such as health care and education, people are more likely to remain trapped in poverty, across several generations.

Between countries, the difference in average incomes is reducing, with China and other Asian nations driving growth in the global economy. Nevertheless, there are still stark differences between the richest and poorest countries and regions: the average income in North America, for example, is 16 times higher than that of people in Sub-Saharan Africa.

Four global forces affecting inequality

The report looks at the impact that four powerful global forces, or megatrends, are having on inequality around the world: technological innovation, climate change, urbanization and international migration.

Whilst technological innovation can support economic growth, offering new possibilities in fields such as health care, education, communication and productivity, there is also evidence to show that it can lead to increased wage inequality, and displace workers.

Rapid advances in areas such as biology and genetics, as well as robotics and artificial intelligence, are transforming societies at pace. New technology has the potential to eliminate entire categories of jobs but, equally, may generate entirely new jobs and innovations.

For now, however, highly skilled workers are reaping the benefits of the so-called “fourth industrial revolution”, whilst low-skilled and middle-skilled workers engaged in routine manual and cognitive tasks, are seeing their opportunities shrink.

Opportunities in a crisis

As the UN’s 2020 report on the global economy showed last Thursday, the climate crisis is having a negative impact on quality of life, and vulnerable populations are bearing the brunt of environmental degradation and extreme weather events. Climate change, according to the World Social Report, is making the world’s poorest countries even poorer, and could reverse progress made in reducing inequality among countries.

If action to tackle the climate crisis progresses as hoped, there will be job losses in carbon-intensive sectors, such as the coal industry, but the “greening” of the global economy could result in overall net employment gains, with the creation of many new jobs worldwide.

For the first time in history, more people live in urban than rural areas, a trend that is expected to continue over the coming years. Although cities drive economic growth, they are more unequal than rural areas, with the extremely wealthy living alongside the very poor.

The scale of inequality varies widely from city to city, even within a single country: as they grow and develop, some cities have become more unequal whilst, in others, inequality has declined.

Migration a ‘powerful symbol of global inequality’

The fourth megatrend, international migration, is described as both a “powerful symbol of global inequality”, and “a force for equality under the right conditions”.

Migration within countries, notes the report, tends to increase once countries begin to develop and industrialize, and more inhabitants of middle-income countries than low-income countries migrate abroad.

International migration is seen, generally, as benefiting both migrants, their countries of origin (as money is sent home) and their host countries.

In some cases, where migrants compete for low-skilled work, wages may be pushed down, increasing inequality but, if they offer skills that are in short supply, or take on work that others are not willing to do, they can have a positive effect on unemployment.

Harness the megatrends for a better world

Despite a clear widening of the gap between the haves and have-nots worldwide, the report points out that this situation can be reversed. Although the megatrends have the potential to continue divisions in society, they can also, as the Secretary-General says in his foreword, “be harnessed for a more equitable and sustainable world”. Both national governments and international organizations have a role to play in levelling the playing field and creating a fairer world for all.

Reducing inequality should, says the report, play a central role in policy-making. This means ensuring that the potential of new technology is used to reduce poverty and create jobs; that vulnerable people grow more resilient to the effects of climate change; cities are more inclusive; and migration takes place in a safe, orderly and regular manner.

Three strategies for making countries more egalitarian are suggested in the report: the promotion of equal access to opportunities (through, for example, universal access to education); fiscal policies that include measures for social policies, such as unemployment and disability benefits; and legislation that tackles prejudice and discrimination, whilst promoting greater participation of disadvantaged groups.

While action at a national level is crucial, the report declares that “concerted, coordinated and multilateral action” is needed to tackle major challenges affecting inequality within and among countries.

The report’s authors conclude that, given the importance of international cooperation, multilateral institutions such as the UN should be strengthened and action to create a fairer world must be urgently accelerated.

The UN’s 2030 Agenda for Sustainable Development , which provides the blueprint for a better future for people and the planet, recognizes that major challenges require internationally coordinated solutions, and contains concrete and specific targets to reduce inequality, based on income.

• World Social Report

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Chapter 10. Global Inequality

Learning objectives.

10.1. Global Stratification and Classification

• Describe global stratification
• Understand how different classification systems have developed
• Use terminology from Wallerstein’s world systems approach
• Explain the World Bank’s classification of economies

10.2. Global Wealth and Poverty

• Understand the differences between relative, absolute, and subjective poverty
• Describe the economic situation of some of the world’s most impoverished areas
• Explain the cyclical impact of the consequences of poverty

10.3. Theoretical Perspectives on Global Stratification

• Describe the modernization and dependency theory perspectives on global stratification

Introduction to Global Inequality

In 2000, the world entered a new millennium. In the spirit of a grand-scale New Year’s resolution, it was a time for lofty aspirations and dreams of changing the world. It was also the time of the Millennium Development Goals (MDGs), a series of ambitious goals set by UN member nations. The MDGs, as they became known, sought to provide a practical and specific plan for eradicating extreme poverty around the world. Nearly 200 countries signed on, and they worked to create a series of 21 targets with 60 indicators, with an ambitious goal of reaching them by 2015. The goals spanned eight categories:

• To eradicate extreme poverty and hunger
• To achieve universal primary education
• To promote gender equality and empower women
• To reduce child mortality
• To improve maternal health
• To combat HIV/AIDS, malaria, and other diseases
• To ensure environmental sustainability
• To develop a global partnership for development (United Nations 2010)

There’s no question that these were well-thought-out objectives to work toward. Many years later, what has happened? As of the 2010 Outcome Document, much progress has been made toward some MDGs, while others are still lagging far behind. Goals related to poverty, education, child mortality, and access to clean water have seen much progress. But these successes show a disparity: some nations have seen great strides made, while others have seen virtually no progress. Improvements have been erratic, with hunger and malnutrition increasing from 2007 through 2009, undoing earlier achievements. Employment has also been slow to progress, as has a reduction in HIV infection rates, which have continued to outpace the number of people getting treatment. The mortality and health care rates for mothers and infants also show little advancement. Even in the areas that made gains, the successes are tenuous. And with the global recession having slowed both institutional and personal funding, the attainment of the goals is very much in question (United Nations 2010). As we consider the global effort to meet these ambitious goals, we can think about how the world’s people have ended up in such disparate circumstances. How did wealth become concentrated in some nations? What motivates companies to globalize? Is it fair for powerful countries to make rules that make it difficult for less-powerful nations to compete on the global scene? How can we address the needs of the world’s population?

10.1. Global Stratification and Classification

Just as North America’s wealth is increasingly concentrated among its richest citizens while the middle class slowly disappears, global inequality involves the concentration of resources in certain nations, significantly affecting the opportunities of individuals in poorer and less powerful countries. But before we delve into the complexities of global inequality, let us consider how the three major sociological perspectives might contribute to our understanding of it.

The functionalist perspective is a macroanalytical view that focuses on the way that all aspects of society are integral to the continued health and viability of the whole. A functionalist might focus on why we have global inequality and what social purposes it serves. This view might assert, for example, that we have global inequality because some nations are better than others at adapting to new technologies and profiting from a globalized economy, and that when core nation companies locate in peripheral nations, they expand the local economy and benefit the workers. Many models of modernization and development are functionalist, suggesting that societies with modern cultural values and beliefs are able to achieve economic development while traditional cultural values and beliefs hinder development. Cultures are either functional or dysfunctional for the economic development of societies.

Critical sociology focuses on the creation and reproduction of inequality. A critical sociologist would likely address the systematic inequality created when core nations exploit the resources of peripheral nations. For example, how many Canadian companies move operations offshore to take advantage of overseas workers who lack the constitutional protection and guaranteed minimum wages that exist in Canada? Doing so allows them to maximize profits, but at what cost?

The symbolic interaction perspective studies the day-to-day impact of global inequality, the meanings individuals attach to global stratification, and the subjective nature of poverty. Someone applying this view to global inequality might focus on understanding the difference between what someone living in a core nation defines as poverty (relative poverty, defined as being unable to live the lifestyle of the average person in your country) and what someone living in a peripheral nation defines as poverty (absolute poverty, defined as being barely able, or unable, to afford basic necessities, such as food).

Global Stratification

While stratification in Canada refers to the unequal distribution of resources among individuals, global stratification refers to this unequal distribution among nations. There are two dimensions to this stratification: gaps between nations and gaps within nations. When it comes to global inequality, both economic inequality and social inequality may concentrate the burden of poverty among certain segments of the Earth’s population (Myrdal 1970). As the table below illustrates, people’s life expectancy depends heavily on where they happen to be born.

Most of us are accustomed to thinking of global stratification as economic inequality. For example, we can compare China’s average worker’s wage to Canada’s average wage. Social inequality, however, is just as harmful as economic discrepancies. Prejudice and discrimination—whether against a certain race, ethnicity, religion, or the like—can create and aggravate conditions of economic equality, both within and between nations. Think about the inequity that existed for decades within the nation of South Africa. Apartheid, one of the most extreme cases of institutionalized and legal racism, created a social inequality that earned it the world’s condemnation. When looking at inequity between nations, think also about the disregard of the crisis in Darfur by most Western nations. Since few citizens of Western nations identified with the impoverished, non-white victims of the genocide, there has been little push to provide aid.

Gender inequity is another global concern. Consider the controversy surrounding female genital mutilation. Nations that practise this female circumcision procedure defend it as a longstanding cultural tradition in certain tribes and argue that the West should not interfere. Western nations, however, decry the practice and are working to stop it.

Inequalities based on sexual orientation and gender identity exist around the globe. According to Amnesty International, a number of types of crimes are committed against individuals who do not conform to traditional gender roles or sexual orientations (however those are culturally defined). From culturally sanctioned rape to state-sanctioned executions, the abuses are serious. These legalized and culturally accepted forms of prejudice and discrimination exist everywhere—from the United States to Somalia to Tibet—restricting the freedom of individuals and often putting their lives at risk (Amnesty International 2012).

Global Classification

A major concern when discussing global inequality is how to avoid an ethnocentric bias implying that less developed nations want to be like those who have attained postindustrial global power. Terms such as “developing” (nonindustrialized) and “developed” (industrialized) imply that nonindustrialized countries are somehow inferior, and must improve to participate successfully in the global economy, a label indicating that all aspects of the economy cross national borders. We must take care in how we delineate different countries. Over time, terminology has shifted to make way for a more inclusive view of the world.

Cold War Terminology

Cold War terminology was developed during the Cold War era (1945–1980) when the world was divided between capitalist and communist economic systems (and their respective geopolitical aspirations). Familiar and still used by many, it involves classifying countries into first world, second world, and third world nations based on respective economic development and standards of living. When this nomenclature was developed, capitalistic democracies such as the United States, Canada, and Japan were considered part of the first world . The poorest, most undeveloped countries were referred to as the third world and included most of sub-Saharan Africa, Latin America, and Asia. The second world  was the socialist world or Soviet bloc: industrially developed but organized according to a state socialist or communist model of political economy. Later, sociologist Manual Castells (1998) added the term fourth world to refer to stigmatized minority groups that were denied a political voice all over the globe (indigenous minority populations, prisoners, and the homeless, for example).

Also during the Cold War, global inequality was described in terms of economic development. Along with developing and developed nations, the terms “less-developed nation” and “underdeveloped nation” were used. Modernization theory suggested that societies moved through natural stages of development as they progressed toward becoming developed societies (i.e., stable, democratic, market oriented, and capitalist). The economist Walt Rustow (1960) provided a very influential schema of development when he described the linear sequence of developmental stages: traditional society (agrarian based with low productivity); pre-take off society (state formation and shift to industrial production, expansion of markets, and generation of surplus); take-off (rapid self-sustained economic growth and reinvestment of capital in the economy); maturity (a modern industrialized economy, highly capitalized and technologically advanced); the age of high mass-consumption (shift from basic goods to “durable” goods (TVs, cars, refrigerators, etc.), and luxury goods, general prosperity, egalitarianism).  Like most versions of modernization theory, Rustow’s schema describes a linear process of development culminating in the formation of democratic, capitalist societies. It was clearly in line with Cold War ideology, but it also echoed widely held beliefs about the idea of social progress as an evolutionary process.

However, as “natural” as these stages of development were taken to be, they required creation, securing, protection, and support. This was the era when the idea of geopolitical noblesse oblige (first-world responsibility) took root, suggesting that the so-called developed nations should provide foreign aid to the less-developed and underdeveloped nations in order to raise their standard of living.

Immanuel Wallerstein: World Systems Approach

Wallerstein’s (1979) world systems approach uses an economic and political basis to understand global inequality. Development and underdevelopment were not stages in a natural process of gradual modernization, but the product of power relations and colonialism. He conceived the global economy as a complex historical system supporting an economic hierarchy that placed some nations in positions of power with numerous resources and other nations in a state of economic subordination. Those that were in a state of subordination faced significant obstacles to mobilization.

Core nations are dominant capitalist countries, highly industrialized, technological, and urbanized. For example, Wallerstein contends that the United States is an economic powerhouse that can support or deny support to important economic legislation with far-reaching implications, thus exerting control over every aspect of the global economy and exploiting both semi-peripheral and peripheral nations. The free trade agreements such as the North American Free Trade Agreement (NAFTA) are examples of how a core nation can leverage its power to gain the most advantageous position in the matter of global trade.

Peripheral nations have very little industrialization; what they do have often represents the outdated castoffs of core nations, the factories and means of production owned by core nations, or the resources exploited by core nations. They typically have unstable government and inadequate social programs, and they are economically dependent on core nations for jobs and aid. There are abundant examples of countries in this category. Check the label of your jeans or sweatshirt and see where it was made. Chances are it was a peripheral nation such as Guatemala, Bangladesh, Malaysia, or Colombia. You can be sure the workers in these factories, which are owned or leased by global core nation companies, are not enjoying the same privileges and rights as Canadian workers.

Semi-peripheral nations are in-between nations, not powerful enough to dictate policy but nevertheless acting as a major source for raw material. They are an expanding middle-class marketplace for core nations, while also exploiting peripheral nations. Mexico is an example, providing abundant cheap agricultural labour to the United States and Canada, and supplying goods to the North American  market at a rate dictated by U.S. and Canadian consumers without the constitutional protections offered to U.S. or Canadian workers.

World Bank Economic Classification by Income

While there is often criticism of the World Bank, both for its policies and its method of calculating data, it is still a common source for global economic data. When using the World Bank categorization to classify economies, the measure of GNI, or gross national income, provides a picture of the overall economic health of a nation. Gross national income equals all goods and services plus net income earned outside the country by nationals and corporations headquartered in the country doing business out of the country, measured in U.S. dollars. In other words, the GNI of a country includes not only the value of goods and services inside the country, but also the value of income earned outside the country if it is earned by foreign nationals or  foreign businesses. That means that multinational corporations that might earn billions in offices and factories around the globe are considered part of a core nation’s GNI if they have headquarters in the core nations. Along with tracking the economy, the World Bank tracks demographics and environmental health to provide a complete picture of whether a nation is high income, middle income, or low income.

High-Income Nations

The World Bank defines high-income nations as having a GNI of at least $12,276 per capita. It separates out the OECD (Organisation for Economic and Co-operative Development) countries, a group of 34 nations whose governments work together to promote economic growth and sustainability. According to the Work Bank (2011), in 2010, the average GNI of a high-income nation belonging to the OECD was $40,136 per capita; on average, 77 percent of the population in these nations was urban. Some of these countries include Canada, the United States, Germany, and the United Kingdom (World Bank 2011). In 2010, the average GNI of a high-income nation that did not belong to the OECD was $23,839 per capita and 83 percent was urban. Examples of these countries include Saudi Arabia and Qatar (World Bank 2011).

There are two major issues facing high-income countries: capital flight and deindustrialization. Capital flight refers to the movement (flight) of capital from one nation to another, as when General Motors, Ford, and Chrysler close Canadian factories in Ontario and open factories in Mexico. Deindustrialization , a related issue, occurs as a consequence of capital flight, as no new companies open to replace jobs lost to foreign nations. As expected, global companies move their industrial processes to the places where they can get the most production with the least cost, including the costs for building infrastructure, training workers, shipping goods, and, of course, paying employee wages. This means that as emerging economies create their own industrial zones, global companies see the opportunity for existing infrastructure and much lower costs. Those opportunities lead to businesses closing the factories that provide jobs to the middle-class within core nations and moving their industrial production to peripheral and semi-peripheral nations.

Making Connections: the Big Picture

Capital flight, outsourcing, and jobs in canada.

As mentioned above, capital flight describes jobs and infrastructure moving from one nation to another. Look at the manufacturing industries in Ontario. Ontario has been the traditional centre of manufacturing in Canada since the 19th century. At the turn of the 21st century, 18 percent of Ontario’s labour market was made up of manufacturing jobs in industries like automobile manufacturing, food processing, and steel production. At the end of 2013, only 11 percent of the labour force worked in manufacturing. Between 2000 and 2013, 290,000 manufacturing jobs were lost (Tiessen 2014). Often the culprit is portrayed as the high value of the Canadian dollar compared to the American dollar. Because of the high value of Canada’s oil exports, international investors have driven up the value of the Canadian dollar in a process referred to as Dutch disease, the relationship between an increase in the development of natural resources and a decline in manufacturing. Canadian-manufactured products are too expensive as a result. However, this is just another way of describing the general process of capital flight to locations that have cheaper manufacturing costs and cheaper labour. Since the introduction of the North American free trade agreements (the Free Trade Agreement (FTA) in 1988 and the North American Free Trade Agreement (NAFTA) in 1994), the ending of the tariff system that protected branch plant manufacturing in Canada has enabled U.S. companies to shift production to low-wage regions south of the border and in Mexico.

Capital flight also occurs when services (as opposed to manufacturing) are relocated. Chances are if you have called the tech support line for your cell phone or internet provider, you have spoken to someone halfway across the globe. This professional might tell you her name is Susan or Joan, but her accent makes it clear that her real name might be Parvati or Indira. It might be the middle of the night in that country, yet these service providers pick up the line saying, “good morning,” as though they are in the next town over. They know everything about your phone or your modem, often using a remote server to log in to your home computer to accomplish what is needed. These are the workers of the 21st century. They are not on factory floors or in traditional sweatshops; they are educated, speak at least two languages, and usually have significant technology skills. They are skilled workers, but they are paid a fraction of what similar workers are paid in Canada. For Canadian and multinational companies, the equation makes sense. India and other semi-peripheral countries have emerging infrastructures and education systems to fill their needs, without core nation costs.

As services are relocated, so are jobs. In Canada, unemployment is high. Many university-educated people are unable to find work, and those with only a high school diploma are in even worse shape. We have, as a country, outsourced ourselves out of jobs, and not just menial jobs, but white-collar work as well. But before we complain too bitterly, we must look at the culture of consumerism that Canadians embrace. A flat screen television that might have cost $1,000 a few years ago is now $350. That cost saving has to come from somewhere. When Canadians seek the lowest possible price, shop at big box stores for the biggest discount they can get, and generally ignore other factors in exchange for low cost, they are building the market for outsourcing. And as the demand is built, the market will ensure it is met, even at the expense of the people who wanted that television in the first place.

Middle-Income Nations

The World Bank defines lower middle income countries as having a GNI that ranges from $1,006 to $3,975 per capita and upper middle income countries as having a GNI ranging from $3,976 to $12,275 per capita. In 2010, the average GNI of an upper middle income nation was $5,886 per capita with a population that was 57 percent urban. Brazil, Thailand, China, and Namibia are examples of middle-income nations (World Bank 2011).

Perhaps the most pressing issue for middle-income nations is the problem of debt accumulation. As the name suggests, debt accumulation is the buildup of external debt, when countries borrow money from other nations to fund their expansion or growth goals. As the uncertainties of the global economy make repaying these debts, or even paying the interest on them, more challenging, nations can find themselves in trouble. Once global markets have reduced the value of a country’s goods, it can be very difficult to manage the debt burden. Such issues have plagued middle-income countries in Latin America and the Caribbean, as well as East Asian and Pacific nations (Dogruel and Dogruel 2007). By way of example, even in the European Union, which is composed of more core nations than semi-peripheral nations, the semi-peripheral nations of Italy, Portugal, and Greece face increasing debt burdens. The economic downturns in these countries are threatening the economy of the entire European Union.

Low-Income Nations

The World Bank defines low-income countries as nations having a GNI of $1,005 per capita or less in 2010. In 2010, the average GNI of a low-income nation was $528 and the average population was 796,261,360, with 28 percent located in urban areas. For example, Myanmar, Ethiopia, and Somalia are considered low-income countries. Low-income economies are primarily found in Asia and Africa, where most of the world’s population lives (World Bank 2011). There are two major challenges that these countries face: women are disproportionately affected by poverty (in a trend toward a global feminization of poverty) and much of the population lives in absolute poverty. In some ways, the term global feminization of poverty says it all: around the world, women are bearing a disproportionate percentage of the burden of poverty. This means more women live in poor conditions, receive inadequate health care, bear the brunt of malnutrition and inadequate drinking water, and so on. Throughout the 1990s, data indicated that while overall poverty rates were rising, especially in peripheral nations, the rates of impoverishment increased nearly 20 percent more for women than for men (Mogadham 2005). Why is this happening? While there are myriad variables affecting women’s poverty, research specializing in this issue identifies three causes:

• The expansion of female-headed households
• The persistence and consequences of intra-household inequalities and biases against women
• The implementation of neoliberal economic policies around the world (Mogadham 2005)

In short, this means that within an impoverished household, women are more likely to go hungry than men; in agricultural aid programs, women are less likely to receive help than men; and often, women are left taking care of families with no male counterpart.

10.2. Global Wealth and Poverty

What does it mean to be poor? Does it mean being a single mother with two kids in Toronto, waiting for her next paycheque before she can buy groceries? Does it mean living with almost no furniture in your apartment because your income does not allow for extras like beds or chairs? Or does it mean the distended bellies of the chronically malnourished throughout the peripheral nations of sub-Saharan Africa and South Asia? Poverty has a thousand faces and a thousand gradations; there is no single definition that pulls together every part of the spectrum. You might feel you are poor if you can’t afford cable television or your own car. Every time you see a fellow student with a new laptop and smartphone you might feel that you, with your ten-year-old desktop computer, are barely keeping up. However, someone else might look at the clothes you wear and the calories you consume and consider you rich.

Types of Poverty

Social scientists define global poverty in different ways, taking into account the complexities and the issues of relativism described above. Relative poverty is a state of living where people can afford necessities but are unable to meet their society’s average standard of living. They are unable to participate in society in a meaningful way. People often disparage “keeping up with the Joneses”—the idea that you must keep up with the neighbours’ standard of living to not feel deprived. But it is true that you might feel “poor” if you are living without a car to drive to and from work, without any money for a safety net should a family member fall ill, and without any “extras” beyond just making ends meet. Contrary to relative poverty, people who live in absolute poverty lack even the basic necessities, which typically include adequate food, clean water, safe housing, and access to health care. Absolute poverty is defined by the World Bank (2011) as when someone lives on less than a dollar a day. A shocking number of people—88 million—live in absolute poverty, and close to 3 billion people live on less than $2.50 a day (Shah 2011). If you were forced to live on $2.50 a day, how would you do it? What would you deem worthy of spending money on, and what could you do without? How would you manage the necessities—and how would you make up the gap between what you need to live and what you can afford?

Subjective poverty describes poverty that is composed of many dimensions; it is subjectively present when your actual income does not meet your expectations and perceptions. With the concept of subjective poverty, the poor themselves have a greater say in recognizing when it is present. In short, subjective poverty has more to do with how a person or a family defines themselves. This means that a family subsisting on a few dollars a day in Nepal might think of themselves as doing well, within their perception of normal. However, a Westerner travelling to Nepal might visit the same family and see extreme need.

Making Connections: the Big Pictures

The underground economy around the world.

What do the driver of an unlicensed speedy cab in St. Catharines, a piecework seamstress working from her home in Mumbai, and a street tortilla vendor in Mexico City have in common? They are all members of the underground economy , a loosely defined unregulated market unhindered by taxes, government permits, or human protections. Official statistics before the 2008 worldwide recession posit that the underground economy accounted for over 50 percent of non-agricultural work in Latin America; the figure went as high as 80 percent in parts of Asia and Africa (Chen 2001). A recent article in the Wall Street Journal discusses the challenges, parameters, and surprising benefits of this informal marketplace. The wages earned in most underground economy jobs, especially in peripheral nations, are a pittance—a few rupees for a handmade bracelet at a market, or maybe 250 rupees (around C$4.50) for a day’s worth of fruit and vegetable sales (Barta 2009). But these tiny sums mark the difference between survival and extinction for the world’s poor.

The underground economy has never been viewed very positively by global economists. After all, its members do not pay taxes, do not take out loans to grow their businesses, and rarely earn enough to put money back into the economy in the form of consumer spending. But according to the International Labour Organization (an agency of the United Nations), some 52 million people worldwide will lose their jobs due to the 2008 recession. And while those in core nations know that unemployment rates and limited government safety nets can be frightening, it is nothing compared to the loss of a job for those barely eking out an existence. Once that job disappears, the chance of staying afloat is very slim.

Within the context of this recession, some see the underground economy as a key player in keeping people alive. Indeed, an economist at the World Bank credits jobs created by the informal economy as a primary reason why peripheral nations are not in worse shape during this recession. Women in particular benefit from the informal sector. The majority of economically active women in peripheral nations are engaged in the informal sector, which is somewhat buffered from the economic downturn. The flip side, of course, is that it is equally buffered from the possibility of economic growth.

Even in Canada, the informal economy exists, although not on the same scale as in peripheral and semi-peripheral nations. It might include under-the-table nannies, gardeners, and housecleaners, as well as unlicensed street vendors and taxi drivers. There are also those who run informal businesses, like daycares or salons, from their houses. Analysts estimate that this type of of labour may make up 10 to 13.5 percent of the overall Canadian economy (Schneider and Enste 2000), a number that will likely grow as companies reduce head counts, leaving more workers to seek other options. In the end, the article suggests that, whether selling medicinal wines in Thailand or woven bracelets in India, the workers of the underground economy at least have what most people want most of all: a chance to stay afloat (Barta 2009).

Who Are the Impoverished?

Who are the impoverished? Who is living in absolute poverty? Most of us would guess correctly that the richest countries typically have the fewest people. Compare Canada, which possesses a relatively small slice of the population pie and owns a large slice of the wealth pie, with India. These disparities have the expected consequence. The poorest people in the world are women  in peripheral and semi-peripheral nations. For women, the rate of poverty is particularly exacerbated by the pressure on their time. In general, time is one of the few luxuries the very poor have, but study after study has shown that women in poverty, who are responsible for all family comforts as well as any earnings they can make, have less of it. The result is that while men and women may have the same rate of economic poverty, women are suffering more in terms of overall well-being ( Buvinić  1997). It is harder for females to get credit to expand businesses, to take the time to learn a new skill, or to spend extra hours improving their craft so as to be able to earn at a higher rate.

The majority of the poorest countries in the world are in Africa. That is not to say there is not diversity within the countries of that continent; countries like South Africa and Egypt have much lower rates of poverty than Angola and Ethiopia, for instance. Overall, African income levels have been dropping relative to the rest of the world, meaning that Africa as a whole is getting relatively poorer. Exacerbating the problem, 2011 saw a drought in northeast Africa that brought starvation to many in the region.

Why is Africa in such dire straits? Much of the continent’s poverty can be traced to the availability of land, especially arable land (land that can be farmed). Centuries of struggle over land ownership have meant that much useable land has been ruined or left unfarmed, while many countries with inadequate rainfall have never set up an infrastructure to irrigate. Many of Africa’s natural resources were long ago taken by colonial forces, leaving little agricultural and mineral wealth on the continent.

Further, African poverty is worsened by civil wars and inadequate governance that are the result of a continent re-imagined with artificial colonial borders and leaders. Consider the example of Rwanda. There, two ethnic groups cohabited with their own system of hierarchy and management until Belgians took control of the country in 1915 and rigidly confined members of the population into two unequal ethnic groups. While, historically, members of the Tutsi group held positions of power, the involvement of Belgians led to the Hutu’s seizing power during a 1960s revolt. This ultimately led to a repressive government and genocide against Tutsis that left hundreds of thousands of Rwandans dead or living in diaspora (U.S. Department of State 2011c). The painful rebirth of a self-ruled Africa has meant many countries bear ongoing scars as they try to see their way toward the future (World Poverty 2012a).

While the majority of the world’s poorest countries are in Africa, the majority of the world’s poorest people are in Asia. As in Africa, Asia finds itself with disparity in the distribution of poverty, with Japan and South Korea holding much more wealth than India and Cambodia. In fact, most poverty is concentrated in South Asia. One of the most pressing causes of poverty in Asia is simply the pressure that the size of the population puts on its resources. In fact, many believe that China’s success in recent times has much to do with its draconian population control rules. According to the U.S. State Department, China’s market-oriented reforms have contributed to its significant reduction of poverty and the speed at which it has experienced an increase in income levels (U.S. Department of State 2011b). However, every part of Asia has felt the global recession, from the poorest countries whose aid packages were hit, to the more industrialized ones whose own industries slowed down. These factors make the poverty on the ground unlikely to improve any time soon (World Poverty 2012b).

Latin America

Poverty rates in some Latin American countries like Mexico have improved recently, in part due to investment in education. But other countries like Paraguay and Peru continue to struggle. Although there is a large amount of foreign investment in this part of the world, it tends to be higher-risk speculative investment (rather than the more stable long-term investment Europe often makes in Africa and Asia). The volatility of these investments means that the region has been unable to leverage them, especially when mixed with high interest rates for aid loans. Further, internal political struggles, illegal drug trafficking, and corrupt governments have added to the pressure (World Poverty 2012c).

Argentina is one nation that suffered from increasing debt load in the early 2000s, as the country tried to fight hyperinflation by fixing the peso to the U.S. dollar. The move hurt the nation’s ability to be competitive in the world market and ultimately created chronic deficits that could only be financed by massive borrowing from other countries and markets. By 2001, so much money was leaving the country that there was a financial panic, leading to riots and ultimately, the resignation of the president (U.S. Department of State 2011a).

Making Connections: Sociology in the Real World

The true cost of a t-shirt.

Most of us do not pay too much attention to where our favourite products are made. And certainly when you are shopping for a cheap T-shirt, you probably do not turn over the label, check who produced the item, and then research whether or not the company has fair labour practices. In fact it can be very difficult to discover where exactly the items we use everyday have come from. Nevertheless, the purchase of a T-shirt involves us in a series of social relationships that ties us to the lives and working conditions of people around the world.

On April 24, 2013, the Rana Plaza building in Dhaka, Bangladesh, collapsed killing 1,129 garment workers. The building, like 90 percent of Dhaka’s 4,000 garment factories, was structurally unsound. Garment workers in Bangladesh work under unsafe conditions for as little as $38 a month so that North American consumers can purchase T-shirts in the fashionable colours of the season for as little as $5. The workers at Rana Plaza were in fact making clothes for the Joe Fresh label—the signature popular Loblaw brand—when the building collapsed. Having been put on the defensive for their overseas sweatshop practices, companies like Loblaw have pledged to improve working conditions in their suppliers’ factories, but compliance has proven difficult to ensure because of the increasingly complex web of globalized production (MacKinnon and Strauss 2013).

At one time, the garment industry was important in Canada, centred on Spadina Avenue in Toronto and Chabanel Street in Montreal. But over the last two decades of globalization, Canadian consumers have become increasingly tied through popular retail chains to a complex network of outsourced garment production that stretches from China, through Southeast Asia, to Bangladesh and Sri Lanka. The early 1990s saw the economic opening of China when suddenly millions of workers were available to produce and manufacture consumer items for Westerners at a fraction of the cost of Western production. Manufacturing that used to take place in Canada moved overseas. Over the ensuing years, the Chinese began to outsource production to regions with even cheaper labour: Vietnam, Cambodia, Sri Lanka, and Bangladesh. The outsourcing was outsourced.  The result is that when a store like Loblaw places an order, it usually works through agents who in turn source and negotiate the price of materials and production from competing locales around the globe.

Most of the T-shirts that we wear in Canada today begin their life in the cotton fields of arid west China, which owe their scale and efficiency to the collectivization projects of centralized state socialism. However, as the cost of Chinese labour has incrementally increased since the 1990s, the Chinese have moved into the role of connecting Western retailers and designers with production centres elsewhere. In a global division of labour, if agents organize the sourcing, production chain and logistics, Western retailers can focus their skill and effort on retail marketing. It was in this context that Bangladesh went from having a few dozen garment factories to several thousand. The garment industry now accounts for 80 percent of Bangladesh’s export earnings. Unfortunately, although there are legal safety regulations and inspections in Bangladesh, the rapid expansion of the industry has exceeded the ability of underfunded state agencies to enforce them.

The globalization of production makes it difficult to follow the links between the purchasing of a T-shirt in a Canadian store and the chain of agents, garment workers, shippers, and agricultural workers whose labour has gone into producing it and getting it to the store. Our lives are tied to this chain each time we wear a T-shirt, yet the history of its production and the lives it has touched are more or less invisible to us. It becomes even more difficult to do something about the working conditions of those global workers when even the retail stores are uncertain about where the shirts come form. There is no international agency that can enforce compliance with safety or working standards. Why do you think worker safety standards and factory building inspections have to be imposed by government regulations rather than being simply an integral part of the production process? Why does it seem normal that the issue of worker safety in garment factories is set up in this way? Why does this make it difficult to resolve or address the issue?

The fair trade movement has pushed back against the hyper-exploitation of global workers and forced stores like Loblaw to try to address the unsafe conditions in garment factories like Rana Plaza. Organizations like the Better Factories Cambodia program inspect garment production regularly in Cambodia, enabling stores like Mountain Equipment Co-op to purchase reports on the factory chains it relies on. After the Rana Plaza disaster, Loblaw signed an Accord of Fire and Building Safety in Bangladesh to try to ensure safety compliance of their suppliers. However the bigger problem seems to originate with our desire to be able to purchase a T-shirt for $5 in the first place.

Consequences of Poverty

Not surprisingly, the consequences of poverty are often also causes. The poor experience inadequate health care, limited education, and the inaccessibility of birth control. Those born into these conditions are incredibly challenged in their efforts to break out since these consequences of poverty are also causes of poverty, perpetuating a cycle of disadvantage.

According to sociologists Neckerman and Torche (2007) in their analysis of global inequality studies, the consequences of poverty are many. They have divided the consequences into three areas. The first, termed “the sedimentation of global inequality,” relates to the fact that once poverty becomes entrenched in an area, it is typically very difficult to reverse. As mentioned above, poverty exists in a cycle where the consequences and causes are intertwined. The second consequence of poverty is its effect on physical and mental health. Poor people face physical health challenges, including malnutrition and high infant mortality rates. Mental health is also detrimentally affected by the emotional stresses of poverty, with relative deprivation carrying the strongest effect. Again, as with the ongoing inequality, the effects of poverty on mental and physical health become more entrenched as time goes on. Neckerman and Torche’s third consequence of poverty is the prevalence of crime. Cross-nationally, crime rates are higher, particularly with violent crime, in countries with higher levels of income inequality (Fajnzylber, Lederman, and Loayza 2002).

While most of us are accustomed to thinking of slavery in terms of pre–Civil War America, modern-day slavery goes hand in hand with global inequality. In short, slavery refers to any time people are sold, treated as property, or forced to work for little or no pay. Just as in pre–Civil War America, these humans are at the mercy of their employers. Chattel slavery , the form of slavery practised in the pre–Civil War American South, is when one person owns another as property. Child slavery, which may include child prostitution, is a form of chattel slavery. Debt bondage , or bonded labour, involves the poor pledging themselves as servants in exchange for the cost of basic necessities like transportation, room, and board. In this scenario, people are paid less than they are charged for room and board. When travel is involved, people can arrive in debt for their travel expenses and be unable to work their way free, since their wages do not allow them to ever get ahead.

The global watchdog group Anti-Slavery International recognizes other forms of slavery: human trafficking (where people are moved away from their communities and forced to work against their will), child domestic work and child labour, and certain forms of servile marriage, in which women are little more than chattel slaves (Anti-Slavery International 2012).

10.3. Theoretical Perspectives on Global Stratification

As with any social issue, global or otherwise, there are a variety of theories that scholars develop to study the topic. The two most widely applied perspectives on global stratification are modernization theory and dependency theory.

Modernization Theory

According to modernization theory, low-income countries are affected by their lack of industrialization and can improve their global economic standing through:

• An adjustment of cultural values and attitudes to work
• Industrialization and other forms of economic growth (Armer and Katsillis 2010)

Critics point out the inherent ethnocentric bias of this theory. It supposes all countries have the same resources and are capable of following the same path. In addition, it assumes that the goal of all countries is to be as “developed” as possible (i.e., like the model of capitalist democracies provided by Canada or the United States). There is no room within this theory for the possibility that industrialization and technology are not the best goals.

There is, of course, some basis for this assumption. Data show that core nations tend to have lower maternal and child mortality rates, longer lifespans, and less absolute poverty. It is also true that in the poorest countries, millions of people die from the lack of clean drinking water and sanitation facilities, which are benefits most of us take for granted. At the same time, the issue is more complex than the numbers might suggest. Cultural equality, history, community, and local traditions are all at risk as modernization pushes into peripheral countries. The challenge, then, is to allow the benefits of modernization while maintaining a cultural sensitivity to what already exists.

Dependency Theory

Dependency theory was created in part as a response to the Western-centric mindset of modernization theory. It states that global inequality is primarily caused by core nations (or high-income nations) exploiting semi-peripheral and peripheral nations (or middle-income and low-income nations), creating a cycle of dependence (Hendricks 2010). In the period of colonialism, core or metropolis nations created the conditions for the underdevelopment of peripheral or hinterland nations through a metropolis-hinterland relationship . The resources of the hinterlands were shipped to the metropolises where they were converted into manufactured goods and shipped back for consumption in the hinterlands. The hinterlands were used as the source of cheap resources and were unable to develop competitive manufacturing sectors of their own.

Dependency theory states that as long as peripheral nations are dependent on core nations for economic stimulus and access to a larger piece of the global economy, they will never achieve stable and consistent economic growth. Further, the theory states that since core nations, as well as the World Bank, choose which countries to make loans to, and for what they will loan funds, they are creating highly segmented labour markets that are built to benefit the dominant market countries.

At first glance, it seems this theory ignores the formerly low-income nations that are now considered middle-income nations and are on their way to becoming high-income nations and major players in the global economy, such as China. But some dependency theorists would state that it is in the best interests of core nations to ensure the long-term usefulness of their peripheral and semi-peripheral partners. Following that theory, sociologists have found that entities are more likely to outsource a significant portion of a company’s work if they are the dominant player in the equation; in other words, companies want to see their partner countries healthy enough to provide work, but not so healthy as to establish a threat (Caniels, Roeleveld, and Roeleveld 2009).

Globalization Theory

Globalization theory approaches global inequality by focusing less on the relationship between dependent and core nations, and more on the international flows of capital investment and disinvestment in an increasingly integrated world market. Since the 1970s, capital accumulation has taken place less and less in the context of national economies. Rather, as we saw in the example of the garment industry, capital circulates on a global scale, leading to a global reordering of inequalities both between nations and within nations. The production, distribution, and consumption of goods and services are administratively and technologically integrated on a worldwide basis. Effectively, we no longer live and act in the self-enclosed spaces of national states.

The core components of the “globalization project” (McMichael 2012)—the project to transform the world into a single seamless market—are the imposition of open “free” markets across national borders, the deregulation of trade and investment, and the privatization of public goods and services. Development has been redefined from the model of nationally managed economic growth to “participation in the world market” according to the World Bank’s World Development Report 1980 (cited in McMichael 2012, pp. 112-113). The global economy as a whole, not  modernized national economies, emerges as the site of development. Within this model, the world and its resources are reorganized and managed on the basis of the free trade of goods and services and the free circulation of capital by democratically unaccountable political and economic elite organizations like the G7, the WTO (World Trade Organization), GATT (General Agreement on Trade and Tariffs), the World Bank and IMF (International Monetary Fund), and the  various international measures used to liberalize the global economy (the 1995 Agreement on Agriculture, Trade-Related Investment Measures (TRIMs), Trade-Related Intellectual Property Rights (TRIPs), and the General Agreement on Trade in Services (GATS)).

According to globalization theory, the outcome of the globalization project has been the redistribution of wealth and poverty on a global scale. Outsourcing shifts production to low-wage enclaves, displacement leads to higher unemployment rates in the traditionally wealthy global north, people migrate from rural to urban areas and “slum cities” and illegally from poor countries to rich countries, while large numbers of workers simply become redundant to global production  and turn to informal, casual labour. The anti-globalization movement has emerged as a counter-movement to define an alternative, non-corporate global project based on environmental sustainability, food sovereignty, labour rights, and democratic accountability.

Making Connections: Careers in Sociology

Factory girls.

We’ve examined functionalist and conflict theorist perspectives on global inequality, as well as modernization and dependency theories. How might a symbolic interactionist approach this topic?

The book Factory Girls: From Village to City in Changing China , by Leslie T. Chang, provides this opportunity. Chang follows two young women (Min and Chunming) who are employed at a handbag plant. They help manufacture coveted purses and bags for the global market. As part of the growing population of young people who are leaving behind the homesteads and farms of rural China, these female factory workers are ready to enter the urban fray and pursue an income much higher than they could have earned back home.

Although Chang’s study is based in a town many have never heard of (Dongguan), this city produces one-third of all shoes on the planet (Nike and Reebok are major manufacturers here) and 30 percent of the world’s computer disk drives, in addition to a wide range of apparel (Chang 2008).

But Chang’s focus is less centred on this global phenomenon on a large scale and more concerned with how it affects these two women. As a symbolic interactionist would do, Chang examines the daily lives and interactions of Min and Chunming—their workplace friendships, family relations, gadgets, and goods—in this evolving global space where young women can leave tradition behind and fashion their own futures.  What she discovers is that the women are definitely subject to conditions of hyper-exploitation, but are also disembedded from the rural, Confucian, traditional culture in a manner that provides them with unprecedented personal freedoms. They go from the traditional family affiliations and narrow options of the past to life in a “perpetual present.” Friendships are fleeting and fragile, forms of life are improvised and sketchy, and everything they do is marked by the goals of upward mobility, resolute individualism, and an obsession with prosperity. Life for the women factory workers in Dongguan is an adventure, compared to their fate in rural village life, but one characterized by gruelling work, insecurity, isolation, and loneliness.  Chang writes, “Dongguan was a place without memory.”

absolute poverty the state where one is barely able, or unable, to afford basic necessities

anti-globalization movement a global counter-movement based on principles of environmental sustainability, food sovereignty, labour rights, and democratic accountability that challenges the corporate model of globalization

capital flight the movement (flight) of capital from one nation to another, via jobs and resources

chattel slavery a form of slavery in which one person owns another

core nations dominant capitalist countries

debt accumulation the buildup of external debt, wherein countries borrow money from other nations to fund their expansion or growth goals

debt bondage when people pledge themselves as servants in exchange for money for passage, and are subsequently paid too little to regain their freedom

deindustrialization the loss of industrial production, usually to peripheral and semi-peripheral nations where the costs are lower

dependency theory theory stating that global inequity is due to the exploitation of peripheral and semi-peripheral nations by core nations

first world a term from the Cold War era that is used to describe industrialized capitalist democracies

fourth world a term that describes stigmatized minority groups who have no voice or representation on the world stage

global feminization a pattern that occurs when women bear a disproportionate percentage of the burden of poverty

global inequality the concentration of resources in core nations and in the hands of a wealthy minority

global stratification the unequal distribution of resources between countries

gross national income (GNI) the income of a nation calculated based on goods and services produced, plus income earned by citizens and corporations headquartered in that country

metropolis-hinterland relationship the relationship between nations when resources of the hinterlands are shipped to the metropolises where they are converted into manufactured goods and shipped back to the hinterlands for consumption

modernization theory a theory that low-income countries can improve their global economic standing by industrialization of infrastructure and a shift in cultural attitudes toward work

peripheral nations nations on the fringes of the global economy, dominated by core nations, with very little industrialization

relative poverty the state of poverty where one is unable to live the lifestyle of the average person in the country

second world a term from the Cold War era that describes nations with moderate economies and standards of living

semi-peripheral nations in-between nations, not powerful enough to dictate policy but acting as a major source of raw materials and providing an expanding middle-class marketplace

subjective poverty a state of poverty subjectively present when one’s actual income does not meet one’s expectations

third world a term from the Cold War era that refers to poor, nonindustrialized countries

underground economy an unregulated economy of labour and goods that operates outside of governance, regulatory systems, or human protections

Section Summary

10.1. Global Stratification and Classification Stratification refers to the gaps in resources both between nations and within nations. While economic equality is of great concern, so is social equality, like the discrimination stemming from race, ethnicity, gender, religion, and/or sexual orientation. While global inequality is nothing new, several factors, like the global marketplace and the pace of information sharing, make it more relevant than ever. Researchers try to understand global inequality by classifying it according to factors such as how industrialized a nation is, whether it serves as a means of production or as an owner, and what income it produces.

When looking at the world’s poor, we first have to define the difference between relative poverty, absolute poverty, and subjective poverty. While those in relative poverty might not have enough to live at their country’s standard of living, those in absolute poverty do not have, or barely have, basic necessities such as food. Subjective poverty has more to do with one’s perception of one’s situation. North America and Europe are home to fewer of the world’s poor than Africa, which has highest number of poor countries, or Asia, which has the most people living in poverty. Poverty has numerous negative consequences, from increased crime rates to a detrimental impact on physical and mental health.

10.3. Theoretical Perspectives on Global Stratification Modernization theory, dependency theory, and globalization theory are three of the most common lenses sociologists use when looking at the issues of global inequality. Modernization theory posits that countries go through evolutionary stages and that industrialization and improved technology are the keys to forward movement. Dependency theory sees modernization theory as Eurocentric and patronizing. With this theory, global inequality is the result of core nations creating a cycle of dependence by exploiting resources and labour in peripheral and semi-peripheral countries. Globalization theory argues that the division between the wealthy and the poor is now organized in the context of a single, integrated global economy rather than between core and peripheral nations.

Section Quiz

10.1. Global Stratification and Classification 1. A sociologist who focuses on the way that multinational corporations headquartered in core nations exploit the local workers in their peripheral nation factories is using a _________ perspective to understand the global economy.

• Critical sociology
• Symbolic interactionist

2. A ____________ perspective theorist might find it particularly noteworthy that wealthy corporations improve the quality of life in peripheral nations by providing workers with jobs, pumping money into the local economy, and improving transportation infrastructure.

3. A sociologist working from a symbolic interaction perspective would ____________________________________.

• Study how inequality is created and reproduced
• Study how corporations can improve the lives of their low-income workersTtry to understand how companies provide an advantage to high-income nations compared to low-income nations
• Want to interview women working in factories to understand how they manage the expectations of their supervisors, make ends meet, and support their households on a day-to-day basis

4. France might be classified as which kind of nation?

• Semi-peripheral

5. In the past, Canada manufactured clothes. Many clothing corporations have shut down their Canadian factories and relocated to China. This is an example of ________________.

• Conflict theory
• Global inequality
• Capital flight

10.2. Global Wealth and Poverty 6. Slavery in the pre–Civil War American South most closely resembled ________________.

• Chattel slavery
• Debt bondage
• Relative poverty

7. Maya is a 12-year-old girl living in Thailand. She is homeless and often does not know where she will sleep or when she will eat. We might say that Maya lives in _________ poverty.

8. Mike, a college student, rents a studio apartment. He cannot afford a television and lives on cheap groceries like dried beans and ramen noodles. Since he does not have a regular job, he does not own a car. Mike is living in ___________________.

• Global poverty
• Absolute poverty
• Subjective poverty

9. Faith has a full-time job and two children. She has enough money for the basics and can pay her rent each month, but she feels that, with her education and experience, her income should be enough for her family to live much better than they do. Faith is experiencing _________________.

10. In a B.C. town, a mining company owns all the stores and most of the houses. It sells goods to the workers at inflated prices, offers house rentals for twice what a mortgage would be, and makes sure to always pay the workers less than they need to cover food and rent. Once the workers are in debt, they have no choice but to continue working for the company, since their skills will not transfer to a new position. This most closely resembles ______________.

• Child slavery
• Debt slavery
• Servile marriage

10.3. Theoretical Perspectives on Global Stratification 11. One flaw in dependency theory is the unwillingness to recognize ____________________________________.

• That previously low-income nations such as China have successfully developed their economies and can no longer be classified as dependent on core nations
• That previously high-income nations such as China have been economically overpowered by low-income nations entering the global marketplace
• That countries such as China are growing more dependent on core nations
• That countries such as China do not necessarily want to be more like core nations

12. One flaw in modernization theory is the unwillingness to recognize____________________________________.

• That semi-peripheral nations are incapable of industrializing
• That peripheral nations prevent semi-peripheral nations from entering the global market
• Its inherent ethnocentric bias
• The importance of semi-peripheral nations industrializing

13. If a sociologist says that nations evolve toward more advanced technology and more complex industry as their citizens learn cultural values that celebrate hard work and success, she is using _________________ theory to study the global economy.

• Modernization theory
• Dependency theory
• Globalization theory
• Evolutionary dependency theory

14. If a sociologist points out that corporate interests dominate the global economy, in part by creating global trade agreements and eliminating international tariffs that will inevitably favour the ability of capital to invest in low wage regions, he or she is a _______________________.

• Dependency theorist
• Globalization theorist
• Modernization theorist

15. Dependency theorists explain global inequality and global stratification by focusing on the way that ____________________________________.

• Core nations and peripheral nations exploit semi-peripheral nations
• Semi-peripheral nations exploit core nations
• Peripheral nations exploit core nations
• Core nations exploit peripheral nations

Short Answer

• Consider the matter of rock-bottom prices at Walmart. What would a functionalist think of Walmart’s model of squeezing vendors to get the absolute lowest prices so it can pass them along to core nation consumers?
• Why do you think some scholars find Cold War terminology (“first world” and so on) objectionable?
• Give an example of the feminization of poverty in core nations. How is it the same or different in peripheral nations?
• Pretend you are a sociologist studying global inequality by looking at child labour manufacturing Barbie dolls in China. What do you focus on? How will you find this information? What theoretical perspective might you use?
• Consider the concept of subjective poverty. Does it make sense that poverty is in the eye of the beholder? When you see a homeless person, is your reaction different if he or she is seemingly content rather than begging? Why?
• Think of people among your family, your friends, or your classmates who are relatively unequal in terms of wealth. What is their relationship like? What factors come into play?
• Go to your campus bookstore or visit its website. Find out who manufactures apparel and novelty items with your school’s insignias. In what countries are these produced? Does your school adhere to any principles of fare trade?
• There is much criticism that modernization theory is Eurocentric. Do you think dependency theory and globalization theory are also biased? Why or why not?
• Compare and contrast modernization theory, dependency theory, and globalization theory. Which do you think is more useful for explaining global inequality? Explain, using examples.

Further Research

10.1. Global Stratification and Classification To learn more about the United Nations Millennium Development Goals, go to: http://openstaxcollege.org/l/UN_development_goals

To learn more about the existence and impact of global poverty, peruse the data here: http://openstaxcollege.org/l/poverty_data

10.2. Global Wealth and Poverty Students often think that Canada is immune to the atrocity of human trafficking. Check out the following link to learn more about trafficking in Canada: http://www.publicsafety.gc.ca/cnt/rsrcs/pblctns/ntnl-ctn-pln-cmbt/index-eng.aspx ; http://www.canadianwomen.org/trafficking

10.3. Theoretical Perspectives on Global Stratification For more information about global affairs, check the Munk School of Global Affairs website  at http://munkschool.utoronto.ca/

Learn more about the anti-globalization movement from Naomi Klein’s website: http://www.naomiklein.org/main

10. Introduction to Global Inequality United Nations Development Programme. 2010. “Millennium Development Goals.” Retrieved December 29, 2011 ( http://www.undp.org/mdg/basics.shtml ).

10.1. Global Stratification and Classification Amnesty International. 2012. “Sexual Orientation and Gender Identity.” Retrieved January 3, 2012 ( http://www.amnesty.org/en/sexual-orientation-and-gender-identity ).

Castells, Manuel. 1998. End of Millennium. Malden, MA: Blackwell.

Central Intelligence Agency. 2012. “The World Factbook.” Retrieved January 5, 2012 ( https://www.cia.gov/library/publications/the-world-factbook/wfbExt/region_noa.html ).

Dogruel, Fatma and A.Suut Dogruel. 2007. “Foreign Debt Dynamics in Middle Income Countries.” Paper presented January 4, 2007 at Middle East Economic Association Meeting, Allied Social Science Associations, Chicago, IL.

Moghadam, Valentine M. 2005. “The Feminization of Poverty and Women’s Human Rights.” Gender Equality and Development Section UNESCO , July. Paris, France.

Myrdal, Gunnar. 1970. The Challenge of World Poverty: A World Anti-Poverty Program in Outline . New York: Pantheon.

Rustow, Walt. 1960. The Stages of Economic Growth: A Non-Communist Manifesto. Cambridge: Cambridge University Press.

Tiessen, Kaylie. 2014. Seismic Sift: Ontario’s Changing Labour Market. Canadian Centre for Policy Alternatives. March. Retrieved April 9, 2014, from https://www.policyalternatives.ca/sites/default/files/uploads/publications/Ontario%20Office/2014/03/Seismic%20ShiftFINAL.pdf

Wallerstein, Immanuel. 1979. The Capitalist World Economy . Cambridge, England: Cambridge World Press.

World Bank. 2011. Poverty and Equity Data . Retrieved December 29, 2011 ( http://povertydata.worldbank.org/poverty/home ).

10.2. Global Wealth and Poverty Anti-Slavery International. 2012. “What Is Modern Slavery?” Retrieved January 1, 2012 ( http://www.antislavery.org/english/slavery_today/what_is_modern_slavery.aspx ).

Barta, Patrick. 2009. “The Rise of the Underground.” Wall Street Journal. March 14. Retrieved January 1, 2012 ( http://online.wsj.com/article/SB123698646833925567.html ).

Buvinić, M. 1997. “Women in Poverty: A New Global Underclass.” Foreign Policy , Fall (108):1–7.

Chen, Martha. 2001. “Women in the Informal Sector: A Global Picture, the Global Movement.” The SAIS Review 21:71–82.

Fajnzylber, Pablo, Daniel Lederman, and Norman Loayza. 2002. “Inequality and Violent Crime.” Journal of Law and Economics 45:1–40.

Mackinnon, Mark and Marina Strauss. 2013. “The True Cost of a T-Shirt [B1]”   Toronto Globe and Mail. October 12. Retrieved April 8, 2014, from   http://www.theglobeandmail.com/report-on-business/spinning-tragedy-the-true-cost-of-a-t-shirt/article14849193/

Neckerman, Kathryn and Florencia Torche. 2007. “Inequality: Causes and Consequences.” Annual Review of Sociology 33:335–357.

Schneider, F. and D.H. Enste. 2000. “Shadow economies: size, causes, and consequences.” Journal of Economic Literature. 38 (1):  77-114.

Shah, Anup. 2011. “Poverty around the World.” Global Issues . Retrieved January 17, 2012 ( http://www.globalissues.org/print/article/4 ).

U.S. Department of State. 2011a. “Background Note: Argentina.” Retrieved January 3, 2012 ( http://www.state.gov/r/pa/ei/bgn/26516.htm ).

U.S. Department of State. 2011b. “Background Note: China.” Retrieved January 3, 2012 ( http://www.state.gov/r/pa/ei/bgn/18902.htm#econ ).

U.S. Department of State. 2011c. “Background Note: Rwanda.” Retrieved January 3, 2012 ( http://www.state.gov/r/pa/ei/bgn/2861.htm#econ ).

USAS. 2009. “Mission, Vision and Organizing Philosophy.” August. Retrieved January 2, 2012 ( http://usas.org ).

World Bank. 2011. “Data.” Retrieved December 22, 2011 ( http://www.worldbank.org ).

World Poverty. 2012a. “Poverty in Africa, Famine and Disease.” Retrieved January 2, 2012 ( http://world-poverty.org/povertyinafrica.aspx ).

World Poverty. 2012b “Poverty in Asia, Caste and Progress.” Retrieved January 2, 2012 ( http://world-poverty.org/povertyinasia.aspx ).

World Poverty. 2012c. “Poverty in Latin America, Foreign Aid Debt Burdens.” Retrieved January 2, 2012 ( http://world-poverty.org/povertyinlatinamerica.aspx ).

10.3. Theoretical Perspectives on Global Stratification Armer, J. Michael and John Katsillis. 2010. “Modernization Theory.” Encyclopedia of Sociology , edited by E. F. Borgatta. Retrieved January 5, 2012 ( http://edu.learnsoc.org/Chapters/3%20theories%20of%20sociology/11%20modernization%20theory.htm ).

Caniels, Marjolein, C.J. Roeleveld, and Adriaan Roeleveld. 2009. “Power and Dependence Perspectives on Outsourcing Decisions.”  European Management Journal 27:402–417. Retrieved January 4, 2012 ( http://ou-nl.academia.edu/MarjoleinCaniels/Papers/645947/Power_and_dependence_perspectives_on_outsourcing_decisions ).

Chang, Leslie T. 2008. Factory Girls: From Village to City in Changing China . New York: Random House.

Hendricks, John. 2010. “Dependency Theory.” Encyclopedia of Sociology , edited by E.F. Borgatta. Retrieved January 5, 2012 ( http://edu.learnsoc.org/Chapters/3%20theories%20of%20sociology/5%20dependency%20theory.htm ).

McMichael, Philip. 2012. Development and Change. L.A.: Sage.

Solutions to Section Quiz

1. B  |  2. A  |  3. D  |  4. B  |  5. D  |  6. A  |  7. B  |  8. D  |  9. B  |  10. C  |  11. A  |  12. C  |  13. A  |  14. B  |  15. D

Image Attributions

Figure 10.2. Eve of Destruction by Rick Harris ( https://www.flickr.com/photos/37153080@N00/62624493/ ) use under CC BY SA 2.0 ( https://creativecommons.org/licenses/by-sa/2.0/ )

Introduction to Sociology - 1st Canadian Edition Copyright © 2014 by William Little and Ron McGivern is licensed under a Creative Commons Attribution 4.0 International License , except where otherwise noted.

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The history of global economic inequality

The inequality in people’s living conditions across the world is extremely large. how did the world become so unequal, and what can we expect for the future.

This article was originally published in 2017. The data shown and discussed in the text are therefore not always the latest estimates. For more up-to-date data, see our Data Explorers on Poverty and Inequality .

The inequality in people’s living conditions today is extremely large. The panel of charts below shows how large these differences are, and how the inequality in 12 important measures of living standards maps onto the economic inequality in the world.

What is most important for how healthy, wealthy, and educated you are is not who you are, but where you are. This was the point I made in another article . A person’s knowledge, skills, and how hard they work all matter for whether they are poor or not – but all these personal factors together matter less than the one factor that is entirely outside of a person’s control: whether they happen to be born into a large, productive economy or not.

How did we get here? How did the world become so unequal, and what can we expect for the future?

Global divergence followed by convergence

The chart shows estimates of the distribution of annual income among all world citizens over the last two centuries.

To make incomes comparable across countries and time, daily incomes are measured in international-$ — a hypothetical currency that would buy a comparable amount of goods and services that a U.S. dollar would buy in the United States in 2011 (for a more detailed explanation, see here ).

The distribution of incomes is shown at 3 points in time:

• By 1800, few countries had achieved economic growth. The chart shows that most of the world lived in poverty with an income similar to today's poorest countries. At the beginning of the 19th century, the vast majority— roughly 80% —of the world lived in material conditions that we would refer to as extreme poverty today.
• In 1975, 175 years later, the world had changed—it had become very unequal. The world income distribution was 'bimodal', with the two-humped shape of a camel: one hump below the international poverty line and a second hump at considerably higher incomes. The world had divided into a poor, developing world and a developed world more than 10-times richer.
• Over the following 4 decades, the world income distribution has again changed dramatically. There has been a convergence in incomes: in many poorer countries, especially in South-East Asia, incomes have grown faster than in rich countries. While enormous income differences remain, the world can no longer be neatly divided into 'developed' and 'developing' countries. We have moved from a two-hump to a one-hump world. And at the same time, the distribution has also shifted to the right—the incomes of many of the world's poorest citizens have increased, and extreme poverty has fallen faster than ever before in human history.

We have visualized a similar dataset from the OECD here . 1

Global income inequality increased for two centuries and is now falling

This visualization shows the distribution of incomes between 1988 and 2011. The data was compiled by the economists Branko Milanovic and Christoph Lakner. 3

To see the change over time, select the years above the distribution.

The previous visualization, which showed the change from 1820 to the year 2015, is based on estimates of inflation-adjusted average incomes per country (GDP per capita) and a measure of income inequality within a country only. It gives us a rough idea of how the distribution of incomes changed, but it is not very detailed or precise. In contrast to this, the work by Branko Milanovic and Christoph Lakner is based on much more detailed household survey data. This data measures household income at each decile of the income distribution, and the two authors used this information to arrive at the global income distribution. The downside of this approach is that we can only go as far back in time as household surveys were conducted in many countries around the world.

The visualization shows the end of the long era in human history in which global inequality was increasing. Starting with industrialization in North-Western Europe, incomes in this part of the world started to increase while material prosperity in the rest of the world remained low. While some countries followed European industrialization – first Northern America, Oceania, and parts of South America and later Japan and East Asia – other countries in Asia and Africa remained poor. As a consequence of this, global inequality increased over a long period. Only in the period shown in this visualization did this change: with rapid growth in much of Asia and Latin America, the global distribution of incomes became less unequal. The incomes of the poorer half of the world population rose faster than the incomes of the richer half.

Global Income Distribution 1988 to 2011 3

If you want to use this visualization for a presentation or teaching purposes, download a zip folder with an image file for every year and an animated .gif here .

A look into the future of global inequality

This visualization shows how the global income distribution has changed over the decade up to 2013. Tomáš Hellebrandt and Paolo Mauro, the authors of the paper 4 from which this data is taken, confirm the finding that global inequality has declined but remains very high: the Gini coefficient of global inequality has declined from 68.7 to 64.9.

The visualizations above show the income distribution on a logarithmic x-axis. This chart, in contrast, plots incomes on a linear x-axis and thereby emphasizes how very high global inequality still is: The bulk of the world population lives on very low incomes, and the income distribution stretches out very far to the higher incomes at the right-hand side of the chart; incomes over 14,000 international-$ are cut off as they would make this chart with a linear x-axis unreadable.

A second positive global development shown in this chart is the rise of the global median income. In 2003 half of the world's population lived on less than 1,090 international-$ per year, and the other half lived on more than 1,090 international-$. This level of global median income has almost doubled over the last decade and was 2,010 international-$ in 2013.

Finally, the authors also dare to project what global inequality will look like in 2035. Assuming the growth rates shown in the insert in the top-right corner, the authors project global inequality to decline further and to reach a Gini of 61.3. At the same time, the incomes of the world's poorer half would continue to increase significantly, so that the global median income could again double and reach 4,000 international-$ in 2035.

If you are looking for a visualization of only the observed global income distribution in 2003 and 2013, you can find it here .

How global inequality has changed from 2003 to 2013

The following visualization offers an alternative view of the data by Hellebrandt and Mauro 4 shown in the chart before.

The chart shows the yearly disposable income for all world citizens in both 2003 and 2013. On the x-axis, you see the position of an individual in the global distribution of incomes. On the logarithmic y-axis, you see the annual disposable income at that position.

The increase in prosperity—and decrease in poverty—is substantial. The income cut-off of the poorest 10% has increased from 260 international-$ to 480 international-%, and the median income has almost doubled from 1,100 international-$ to 2,010. Global mean income in 2013 was 5,375 international-$. 5

At the same it is still the case, as emphasized before, that incomes are very low for most people in the world.

Global income inequality is very high and will likely stay high for a long time

The visualization presents the same data in the same way, except that the y-axis is now not logarithmic but linear. This perspective shows the still very high level of global inequality even more clearly.

The previous and the following visualization show how high global income inequality is. The cut-off to the richest 10% of the world in 2013 was 14,500 int-$; the cut-off for the poorest 10% was 480 int-$. The ratio is 30.2.

While global inequality is still very high, we live in a period of falling inequality. In 2003, this ratio was 37.6. The Gini coefficient has also fallen from 68.7 to 64.9.

Taking the historical experience as a guide for what is possible in the future, we have to conclude that global inequality will remain high for a long time. To understand this, we can ask how long it would take for those with incomes at the poorest 10% cutoff to achieve the current incomes of the richest 10% cutoff (14,500 international-$). This income level is roughly the level of GDP per capita above which the extreme poverty headcount gets close to 0% for most countries ( see here ).

Even under a very optimistic scenario, it will take several decades for the poorest regions to reach the income level of the global top 10%.

2% is roughly the growth rate that the richest countries of today experienced over the last decades ( see here ). We have seen that poorer countries can achieve faster growth, but we have not seen growth rates of more than 6% over a time frame as long as necessary to reach the level of the global 10% in such a short time. If the past is a good guide for the future, the world will likely be highly unequal for a long time.

How long does it take for incomes to grow from 480 int-$ to 14,500 int-$?

Inequality within countries and inequality between countries.

Global inequality is driven by changes in both the inequality within countries, and the inequality between countries. This visualization shows how both of these changes determine the changing global inequality.

• Inequality within countries followed a U-shape pattern over the 20th century.
• Inequality between countries increased over 2 centuries and peaked in the 1980s, according to the data from Bourguignon and Morrison. Since then, inequality between countries has declined.

As is shown in this visualization, the inequality of income between different countries is much higher than the inequality within countries. The consequence of this is that the trend of global inequality is very much driven by what is happening to the inequality between countries.

I have taken the data for the visualization of the world income distribution in 1820, 1970, and 2000 from van Zanden, J.L., et al. (eds.) (2014), How Was Life?: Global Well-being since 1820, OECD Publishing. Online here . The plotted data is interpolated using a Cardinal spline.

The data is originally from the Clio-Infra database here .

The data are produced by Ola Rosling and published on the website of Gapminder.

You can explore the Gapminder visualization of the income distributions of all countries in their interactive tool here . Regarding the construction of the data, Hans and Ola Rosling note the following here : “This graph is constructed by combining data from multiple sources. In summary, we take the best available country estimates for the three indicators: GDP per capita, Population, and Gini coefficient (a measure of income inequality). With these numbers, we can approximate the number of people at different income levels in every country. We then combine all these approximations into a global pile using the method described below under The Adjusted Global Income Scale.”

The data was made available to Our World In Data by the two authors. The data up to 2008 is published with the main publication Milanovic and Lakner (2015) –Global Income Distribution. Available online at the World Bank: http://elibrary.worldbank.org/doi/abs/10.1596/1813-9450-6719 .

The data source is: Hellebrandt, Tomas and Mauro, Paolo (2015) – The Future of Worldwide Income Distribution (April 1, 2015). Peterson Institute for International Economics Working Paper No. 15-7. Available at SSRN or http://dx.doi.org/10.2139/ssrn.2593894 .

We thank the authors for making the data available for this data visualization.

Note that global GDP per capita in 2013 was around 14,000 international-$ and substantially higher than mean disposable income from household-level surveys at 5,375 international-$.

We discuss the reasons for this discrepancy here . See also the Appendix of the original publication for a longer explanation.

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• Journal of Economic Literature

Inequality and Globalization: A Review Essay

• Martin Ravallion
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Global Inequality and Global Poverty

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The world is very unequal. This applies both to inequalities within countries and between countries. Global inequalities of income and wealth are on the increase, in most respects, while global poverty has been significantly reduced in recent years. However, global income inequality between countries has recently lessened. Improvements are also evident in global health and some aspects of gender inequality. Yet the topic is complex and uncertain. This is partly because inequality and poverty are not easy to measure. Inequality and poverty are also multidimensional involving political participation and cultural acceptance as well as income, health, and literacy. Explanations of inequality and poverty are similarly complex. Globalization, through concentrations of global economic power, is responsible for some inequality. Unregulated markets, however dynamic, do not distribute their benefits equally between individuals and between countries. Yet it is too simplistic to see free trade causing global inequality since free trade can, in some circumstances, lift incomes. More significant is deregulation which undermines social protection and allows massive tax avoidance. New global policies of taxation and more systematic public intervention in health and literacy are more relevant to inequality-reduction than economic protectionism.

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Holton, R. (2020). Global Inequality and Global Poverty. In: Rossi, I. (eds) Challenges of Globalization and Prospects for an Inter-civilizational World Order. Springer, Cham. https://doi.org/10.1007/978-3-030-44058-9_20

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• 16 August 2023

Reducing inequality benefits everyone — so why isn’t it happening?

You have full access to this article via your institution.

A tale of two cities: an aerial view of Rio de Janeiro in Brazil illustrates the scale of inequality. Research shows that, within nations, the income gap between the richest and poorest is increasing Credit: Frédéric Soltan/Corbis/Getty

Last month, researchers from 67 nations wrote an open letter to United Nations secretary-general António Guterres and World Bank president Ajay Banga , urging them to “redouble efforts to address rising extreme inequality”. The move was motivated, in part, by the lack of progress on the 10th of the 17 UN Sustainable Development Goals (SDGs). Nature is examining each goal in a series of editorials.

The aim of SDG 10 is to “reduce inequality within and among countries”. That means narrowing the difference between the incomes of the richest and the poorest, on both a national and an international level. The goal also proposes ensuring equality of opportunity. Unfortunately, the world is clearly failing to meet SDG 10. The letter’s authors go further, saying that the goal is being “largely ignored”.

How COVID has deepened inequality — in six stark graphics

This is not the first time that researchers have tried to focus the world’s attention on inequality. For a better chance of success, the letter’s authors should study what happened to previous efforts — in particular, the 2009 publication of the influential text The Spirit Level by epidemiologists Richard Wilkinson and Kate Pickett . They showed that reducing inequality has a cascade of benefits, from better health to lower crime rates and better educational outcomes.

The book was a sensation. It was read avidly and quoted widely; its findings referenced by David Cameron, later UK prime minister, and Christine Lagarde, now president of the European Central Bank, among others. Yet despite being widely respected, the authors’ careful synthesis of evidence on the benefits of equality — and subsequent invites to give talks and policy advice worldwide — did not change governments’ approaches to inequality.

Not all of the targets for SDG 10 are failing. Overall income inequality between countries is dropping. Another target, to reduce the costs incurred by migrant workers sending remittances to their families, is also on its way to being met — although not by the SDGs’ 2030 deadline.

Richard Wilkinson and Kate Pickett, the authors of the book The Spirit Level: Why Equality is Better for Everyon e. Credit: Alex Holland

But income inequality within countries is rising, as measured by the Gini index, a measure of income distribution across a population. Globally, in the 15 years to 2019, economic output in terms of gross domestic product (GDP) roughly doubled, but the share of economic output earned by the workers producing the goods and services behind the increase fell from 54.1% in 2004 to 52.6% in 2019.

So what has gone wrong? Between 2019 and 2020, the COVID-19 pandemic caused the steepest rise in global inequality since the Second World War. Some people couldn’t go to work or saw their jobs furloughed, whereas others — mostly in higher-level jobs — were able to move their work online, says Ida Kubiszewski, an ecological economist at University College London.

Then inflation rose. The global average for 2021 was 4.7%, but the rate was much higher in many low- and middle-income countries (LMICs). And that was before Russia’s invasion of Ukraine in February 2022. Although many higher-income countries increased social protections for the most vulnerable, lower-income countries found it a struggle to do so. The aid group Oxfam and the non-profit organization Development Finance International have created an index that measures what governments are doing to tackle inequality. The 2022 edition assessed 161 governments between 2020 and 2022. It found that, during this period, 70% of governments cut their share of spending on education and two-thirds failed to increase the minimum wage in line with GDP (see go.nature.com/3ywfbif ). Some high-income nations are also reducing their development assistance, and direct investment in LMICs by foreign countries is also falling, data from the World Bank show .

Tackling inequality takes social reform

Researchers say that progress on SDG 10 would have been dismal even without the pandemic and the invasion of Ukraine. A large part of the problem is that each of the 17 SDGs has tended to be pursued in isolation, with policymakers unaware that reducing inequality would benefit many of the other goals. A 2019 network analysis studying interactions between SDGs found that reducing inequality in wealthy nations would help to achieve almost all of the other goals ( D. Lusseau & F. Mancini Nature Sustain. 2 , 242–247; 2019 ). The same is true of reducing poverty in poorer nations. This brings us back to last month’s open letter and the arguments made in The Spirit Level . Reducing inequality involves up-front increases in expenditure in areas including health care, social protection and education.

The letter calls for Guterres and Banga to “back vital new strategic goals and indicators”. Among other factors, its authors say, significant improvements in the data on inequality, especially on estimates of top incomes, should make it possible to better understand how policy changes could influence the divide between rich and poor.

Better data are essential, and the lack of good data to support work on the SDGs is becoming something of a theme in this editorials series. But better data alone will not reduce inequality, Wilkinson points out. Asked why he thinks SDG 10 is failing, he points to a reduction in inequality that occurred in high-income nations from the 1930s until the end of the 1970s, broadly because social movements challenged the state to play a bigger part in protecting vulnerable people. He thinks something like that will need to happen again. “Given the powerful interests involved,” he says. “I don’t know why anyone thought that a statement of goals such as the SDGs would succeed.”

Researchers are right to urge leaders to prioritize inequality. They would do even better to study the efforts of Pickett, Wilkinson and others, and determine the reasons why these did not bear fruit.

Nature 620 , 468 (2023)

doi: https://doi.org/10.1038/d41586-023-02551-3

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On the Impact of Inequality on Growth, Human Development, and Governance

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Ines A Ferreira, Rachel M Gisselquist, Finn Tarp, On the Impact of Inequality on Growth, Human Development, and Governance, International Studies Review , Volume 24, Issue 1, March 2022, viab058, https://doi.org/10.1093/isr/viab058

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Inequality is a major international development challenge. This is so from an ethical perspective and because greater inequality is perceived to be detrimental to key socioeconomic and political outcomes. Still, informed debate requires clear evidence. This article contributes by taking stock and providing an up-to-date overview of the current knowledge on the impact of income inequality, specifically on three important outcomes: (1) economic growth; (2) human development, with a focus on health and education as two of its dimensions; and (3) governance, with emphasis on democracy. With particular attention to work in economics, which is especially developed on these topics, this article reveals that the existing evidence is somewhat mixed and argues for further in-depth empirical work across disciplines. It also points to explanations for the lack of consensus embedded in data quality and availability, measurement issues, and shortcomings of the different methods employed. Finally, we suggest promising future research avenues relying on experimental work for microlevel analysis and reiterate the need for more region- and country-specific studies and improvements in the availability and reliability of data.

La desigualdad es un desafío importante para el desarrollo internacional. Esto es así desde una perspectiva ética y debido a que la mayor desigualdad se percibe como perjudicial para los resultados políticos y socioeconómicos clave. Aun así, los debates informados requieren pruebas claras. Esta revisión contribuye estudiando la situación y ofreciendo un resumen actualizado del conocimiento actual sobre el impacto de la desigualdad de ingresos, específicamente en tres resultados importantes: (1) el crecimiento económico; (2) el desarrollo humano, con un enfoque en la salud y la educación como dos de sus dimensiones; y (3) la gobernanza, con énfasis en la democracia. Prestando especial atención al trabajo en economía que se desarrolla particularmente sobre estos temas, este ensayo demuestra que las pruebas existentes están mezcladas de alguna manera y argumenta a favor de promover el trabajo empírico en profundidad en todas las disciplinas. También señala las explicaciones para la falta de consenso que están integradas en la calidad y la disponibilidad de los datos, los problemas de medición y los defectos de los diferentes métodos empleados. Finalmente, sugerimos prometedoras vías de investigación para el futuro que dependen del trabajo experimental para el análisis a pequeña escala, y reiteramos la necesidad de realizar más estudios específicos de la región y el país, así como mejoras en la disponibilidad y la confiabilidad de los datos.

L'inégalité est un défi majeur du développement international. Il en est ainsi d'un point de vue éthique et parce qu'une plus grande inégalité est perçue comme allant au détriment des principaux résultats socio-économiques et politiques. Toutefois, des preuves claires sont nécessaires pour débattre en connaissance de cause. Cette analyse y contribue en faisant le bilan et en offrant une présentation à jour des connaissances actuelles sur l'impact de l'inégalité des revenus, en particulier sur trois résultats importants: (1) la croissance économique, (2) le développement humain, en se concentrant sur la santé et l’éducation en tant que deux de ses dimensions, et (3) la gouvernance, en mettant l'accent sur la démocratie. Cet essai accorde une attention particulière aux travaux en économie qui sont particulièrement développés sur ces sujets et révèle que les preuves existantes sont quelque peu mitigées et plaide pour un travail empirique plus approfondi dans toutes les disciplines. Il met également en évidence des explications du manque de consensus inhérent à la qualité et à la disponibilité des données, aux problèmes de mesure et aux lacunes des différentes méthodes employées. Enfin, nous suggérons des pistes de recherches futures prometteuses qui s'appuieraient sur des travaux expérimentaux pour l'analyse au niveau micro et nous réitérons la nécessité de réaliser davantage d’études spécifiques aux régions et aux pays et d'améliorer la disponibilité et la fiabilité des données.

Recent decades have witnessed sharp rises in inequality of income and wealth in many countries (though neither globally nor everywhere) as well as in the observed level of inequality of opportunities in access to basic services, such as health and education. Concern with these trends is paramount in Goal 10 of the Sustainable Development Goals approved by the United Nations General Assembly in 2015, aiming at “reducing inequality within and among countries.” The COVID-19 pandemic, which has both reflected and exacerbated inequalities, further spotlights this objective.

Pursuing this goal can obviously be justified from an ethical perspective. The case is also made in instrumental terms, with reference to potential negative effects of inequality on a variety of socioeconomic and political outcomes. The World Development Report (2006) drew attention to the implications of high levels of inequality for long-term development ( World Bank 2006 ). Indeed, economists in particular have long been concerned with the relationship between equity and efficiency 1 ; interestingly, the old classical view, contrary to the 2006 report, suggests a contradiction between equality and development.

Informed policy debate requires clear evidence on these impacts. This analytical essay provides a “state-of-art” on research on this big question. While recent reviews of the literature tend to focus on the impact of inequality on one specific outcome, we have a broader scope; we aim to bring new clarity to the debate by taking stock of the current knowledge on the effects on three important outcomes: (1) economic growth; (2) human development, with a focus on health and education as two of its dimensions; and (3) governance, with emphasis on democracy. While we start by highlighting how the various processes are connected, we address the impacts of inequality on these outcomes separately, developing an overview of the core arguments and underlying mechanisms, and of the existing evidence, with a particular focus on cross-country insights.

We draw in particular on the large and well-developed literature on these topics in economics while also taking key insights from other disciplines. 2 Our focus is on broad outcomes that are of particular importance for international development and that received great attention in studies examining the impact of inequality across disciplines. The effects of inequality on economic growth have been extensively debated in economics, the main disciplinary focus of this article. However, health and education—two important channels with high policy relevance—have also been the object of investigation in public health studies. Moreover, the field of political science has greatly contributed to the debate addressing the effects of inequality on political aspects, including those related to democratic governance. 3

Building on previous reviews focusing on specific outcomes (e.g., Voitchovsky 2011 ; Neves and Silva 2014 ; O'Donnell, van Doorslaer, and van Ourti 2015 ; Scheve and Stasavage 2017 ), but adopting the broader outlook of the seminal review by Thorbecke and Charumilind (2002) , this article provides an updated and comprehensive perspective on the consequences of inequality in three core areas of concern for international studies. 4

We combine the main theoretical arguments on the impact of inequality and underlying transmission channels in a general framework, providing a simplified view while emphasizing the connections between different processes. Overall, our review of an extensive body of work suggests there is no clear consensus emerging from the empirical evidence, and we argue there is room for additional in-depth work to uncover the effects through specific mechanisms of transmission. In particular, there is no consensus from the results of studies using reduced-form equations to examine the effect on growth, and less work has been dedicated to exploring the channels of transmission. Moreover, the negative link between inequality and secondary school enrolment is confirmed by the evidence, but further research is needed in terms of other education outcomes. The economic and public health literatures disagree on whether the negative effect of inequality on health is confirmed by the existing evidence, and there are mixed results emerging from political scientists for the effects of inequality on democracy and political participation. We advance the underlying explanations for this state of affairs, related to the challenges inherent in data quality and availability, measurement issues, and shortcomings of the different estimation methods employed, and suggest avenues for further research.

In the second section, we offer an outline of the main theoretical predictions of the effects of inequality on socioeconomic outcomes and on governance, presenting different channels of transmission. The third section follows the same structure and reviews the existing empirical evidence. We reflect on key empirical challenges of estimating the effects of inequality in the fourth section. The fifth section concludes.

Several theoretical explanations exist across disciplines for the effects of inequality on socioeconomic and political outcomes. Before we describe in more detail these channels of influence and the resulting outcomes, we highlight a broader set of arguments, which act as a roadmap for the rest of the section.  Figure 1 provides a schematic overview.

Diagram with main outcomes of inequality

Source : Authors’ elaboration.

Starting from the left- to the right-hand side, the diagram represents different channels of transmission of the effects of higher levels of inequality, their intermediate effects, and the resulting positive or negative impact on our three outcomes of interest: growth, 5 human development, and democracy. We broadly divide these channels according to their underlying drivers: the poor, the population at large or the average, and the wealthy.

Overall, the diagram suggests that high inequality has predominantly harmful effects on our three outcomes of interest, according to theoretical explanations advanced in the literature. The dominant view then runs contra the expectations of the classical theorists, i.e., that inequality has a positive impact on growth, via savings and investment (shown at the top of  figure 1 ). We highlight six main transmission channels.

First, inequality affects incentives for savings and investment and the overall level of institutional quality through its influence on policy making and increased political instability, and consequent effects on property rights and the regulatory framework. This has implications for growth both directly and indirectly via governance.

Second, by favoring private over public investment, inequality affects investment in public goods, namely health and education, with implications across the three outcomes. Third, and related, inequality results in underinvestment on human capital resulting from credit constraints, and high fertility, which affects education levels and overall economic growth.

Fourth, high taxation will be demanded by a well-endowed median voter and the likelihood of transition to and stability of democracy will also depend on the pressure for redistribution, which is higher with lower levels of equality. Moreover, and fifth, a small middle class will affect the demand not only for democracy but also for manufactures.

Finally, high levels of polarization will lead to weak social cohesion via their effects on social capital, as well as low trust and potential high levels in violent crime, which affect health directly and indirectly via investment in public health. Additionally, the concentration of power on the rich leads to increased probability of political violence and affects political engagement.

Some of these channels affect all of the outcomes. For instance, the effect through investment in public goods has detrimental effects on human development, and on growth and democracy. Moreover, the resulting polarization and social discontent, which increase the chances of political violence, again negatively impact the three outcomes. However, there is also some indication that, when it comes to growth, the effect might be ambiguous depending on the predominance of the effects of transmission mechanisms. The channel through savings (and investment) points to a potential positive effect, while the different effects through public investment, taxation, the structure of demand, imperfect credit markets, fertility, and social discontent suggest potential negative consequences for growth.

This section uncovers more details about these different theoretical predictions. It starts by introducing the main hypotheses advanced for the effects of inequality on growth. While the approach in this article considers the three outcomes separately, we recognize that they are not disjointed or orthogonal and refer to the links between them. Nevertheless, a full discussion of these interlinkages is beyond the scope of this article. As suggested in  figure 1 and described in more detail below, some of these channels point to the impact of inequality on our remaining outcomes of interest, namely education and health, or governance. We return to them in the remaining two subsections, where we expand to consider the insights from other strands of literature.

How Inequality Affects Growth

An extensive literature examines the effects of inequality on growth, 6 highlighting multiple channels of transmission. 7 The early studies, referred to as the classical approach, argued that there is a positive effect of inequality on growth, explained via savings or incentives. However, subsequent work questioned this view, challenging some of its assumptions and proposing different channels of influence. Most of this work has predicted a negative effect of inequality. We briefly outline these channels in the next paragraphs and refer to Bourguignon (2015) , Neves and Silva (2014) , and Voitchovsky (2011) for complementary detail and reviews. 8

High inequality is growth enhancing

We start by drawing attention to the view of classical economists on income inequality, according to which there was a contradiction between equality and development (for a discussion of the trade-off between efficiency and equity, see Thorbecke 2016 ). Adam Smith defended that inequality had benefits based on arguments of (1) “trickle-down effects”—the increase in wealth will eventually benefit the poor, (2) incentive effects—inequality is necessary to encourage competition and to provide incentives for innovation, and (3) social stability—the different ranks in wealth distribution ensure peace and stability in society ( Walraevens 2021 , 3–6). The famous Kuznets curve ( Kuznets 1955 ), shaped like an inverted U-relationship between growth and inequality (as per capita income increases), seemed to reinforce this view. 9

Developed in the 1950s and 1960s, the so-called classical approach followed a similar line of thinking, based on arguments related to savings and incentives. The prominent work by Kaldor (1956) suggests a positive link between inequality and growth via saving rates, based on the assumption that the higher the level of income, the higher is the marginal propensity to save ( Aghion, Caroli, and García-Peñalosa 1999 , 1620). At the core of this assumption that the rich have a higher marginal propensity to save relative to the poor are two hypotheses: (1) consumption smoothing cannot occur unless the subsistence level of consumption is achieved, and therefore the poor cannot save, and (2) the possibility to save is conditioned by the previous generations, which leads to a concentration of savings in rich households ( Thorbecke and Charumilind 2002 , 1483).

Under this assumption, the redistribution of resources toward the rich leads to higher savings, which, in turn, improves growth via investment. This link is particularly important if one considers limited borrowing possibilities, initial setup costs, and the large investments involved in risky and high-return opportunities ( Aghion, Caroli, and García-Peñalosa 1999 , 1620; Voitchovsky 2011 , 558). Big investment projects involve large sunk costs, and therefore investment relies on the concentration of wealth in individuals to be able to afford them.

A second argument drew on the role of incentives and on the trade-off between efficiency and social justice mentioned earlier ( Aghion, Caroli, and García-Peñalosa 1999 , 1620). At the microlevel, in a simple moral hazard model, if output depends on unobserved effort, then setting a constant reward (in the form of wage) discourages effort, whereas linking the reward to output can be inefficient due to agents’ risk aversion. The same argument maintains at the aggregate level, assuming identical agents and/or perfect capital markets. As explained by Aghion, Caroli, and García-Peñalosa (1999 , 1620), redistribution will have a direct negative effect on growth as well as a negative indirect effect through the reduction in the incentives to accumulate wealth (resulting from redistribution through income tax).

High inequality has a negative effect on growth

Credit market imperfections and fertility.

The effects of inequality on growth via credit market imperfections and via fertility are linked by their focus on the circumstances of the poor and on human capital investment ( Voitchovsky 2011 ). The first channel addresses the impact of credit imperfections on investment decisions. If one considers the high fixed costs associated with, for instance, education, limitations on the access to credit may lead to underinvestment in human capital, which implies a negative impact on growth ( Neves and Silva 2014 , 3). This was the argument resulting from the Galor and Zeira (1993) model. Assuming that credit markets are imperfect and that investment in human capital is indivisible, they conclude that the distribution of wealth has an impact on aggregate investment in human capital and therefore on growth, both in the short and in the long run.

The reasoning behind the link between inequality and growth through fertility was similar. Poor families might not have the resources to invest in their children's education and, thus, their income depends on having bigger families; for richer families, it might be optimal to invest more in education and, consequently, to have fewer children ( Gründler and Scheuermeyer 2018 , 295). In this line of thinking, de la Croix and Doepke (2003) argued that a high fertility differential between the rich and the poor lowered average education. Thus, inequality leads to lower levels of human capital accumulation via the increased fertility differential and, therefore, to lower growth.

Taxation and regulatory policies

Seminal work by Alesina and Rodrik (1994) as well as Persson and Tabellini (1994) pointed to a negative link between inequality and growth through government expenditure and taxation, combining endogenous growth theory with political economy insights. They proposed two different mechanisms that Perotti (1996 , 151) termed “political” and “economic,” respectively. The Alesina and Rodrik (1994) model drew on the median voter theorem and considered tax revenues equally distributed among all individuals. Given that the tax rate is proportional to income, individuals with a lower share of capital income (relative to labor income) prefer higher taxes. Thus, the more equitable the distribution in the economy, the better endowed is the median voter, and the lower the equilibrium level of taxation. A lower rate of tax corresponds to a higher growth rate, which led them to conclude that there is an inverse relationship between inequality and subsequent economic growth.

Persson and Tabellini (1994) reached the same conclusion considering the role of incentives for productive accumulation and for growth. According to them, the incentives necessary for private savings and investment rely on individuals’ ability to “appropriate privately the fruits of their efforts” ( Persson and Tabellini 1994 , 600), which are in turn influenced by tax and regulatory policies. Inequality gives rise to policies that do not protect property rights or allow full appropriation of returns to investment and is therefore associated with lower economic growth.

Still, this result was defied by Li and Zou (1998) . They offered a more general framework than that proposed by Alesina and Rodrik (1994) , considering that government spending could be directed not only to production services—which entered the production function—but also to consumption services—which entered the utility function. Adding this extension, they showed that a more equal distribution could lead to lower growth via higher taxation and that the effect of income inequality on growth is, therefore, ambiguous.

The view outlined in Alesina and Rodrik (1994) and in Persson and Tabellini (1994) was also challenged by an alternative perspective suggesting that redistributive policies might also have a positive effect on growth in the presence of imperfect credit and insurance markets and that the popular support for these policies decreases with inequality ( Bénabou 2000 ). When combined, these two mechanisms could lead to multiple steady states, while the correlation with growth depends on the balance between incentive distortions and credit constraints ( Neves and Silva 2014 , 4). Voitchovsky (2011 , 556) lists the criticism toward the median voter argument and highlights how the channel through redistribution does not gather consensus.

The structure of demand

Zweimüller (2000) described the role of redistribution on growth through innovation. Building on the assumption of hierarchical preferences, the distribution of income affects the structure of demand: poor people spend mainly on basic needs whereas rich people spend on luxury goods. According to the author, inequality affects growth through its effect on the time path faced by an innovator. When a new and expensive good is introduced in the market, only rich consumers can afford it, until the increasing demand drives the price–wage ratio down (due to economies of scale), opening up the market to mass consumers ( Voitchovsky 2011 , 557). The optimal consumption levels of those affected by redistribution dictate the overall effect of changes in income inequality on long-run growth ( Zweimüller 2000 ). An earlier study by Murphy, Shleifer, and Vishny (1989) had already highlighted the importance of the middle class to the consumption of domestic manufactures and, therefore, to industrialization.

Sociopolitical instability and rent seeking

Another group of studies suggested a link between inequality and growth through sociopolitical instability, drawing attention to the effects on property rights. According to Alesina and Perotti (1996) , social unrest—resulting from social discontent caused by income inequality—can lead to an increasing probability of political violence as well as policy uncertainty and threats to property rights, which, in turn, have a negative impact on investment and thus on growth. Keefer and Knack (2002) claimed that income inequality leads to instability in government policies, namely those related to security of property rights, which affects the decisions of economic actors, and consequently slows the rate of growth. Relatedly, the Glaeser, Scheinkman, and Shleifer (2003) model showed a detrimental effect of inequality on property rights through the subversion of political regulatory and legal institutions by the rich for their own benefit.

The effect depends

Finally, we highlight contributions suggesting that different mechanisms might be present at different points. Galor and Moav (2004) proposed a unified theory between the credit market imperfections and the saving rate channels described earlier. According to them, the positive effect of inequality on growth suggested by classical theories corresponded to early stages of industrialization when physical capital accumulation is the primary driver of economic growth. However, at later stages, human capital accumulation becomes the main determinant of growth and credit constraints are largely binding, which explains the negative link between inequality and growth through credit market imperfections. As credit constraints become less binding due to wage increases, the aggregate effect of income distribution on growth is less significant.

A decade later, Halter, Oechslin, and Zweimüller (2014) presented a parsimonious theoretical model that takes into account both a short-term and a long-term effect of asset inequality. According to them, the short-term effect is positive and it occurs through an economic channel, whereas the long-term effect is negative and stems from a political economy channel.

How Inequality Affects Education and Health

Inequality can have both positive and negative effects on education.

While the literature examining the effects of education on inequality is extensive, the same is not true for studies looking at the other direction of causality. We distinguish between the arguments on the effects of inequality through expenditure on education and through school enrolment and attainment.

The provision of education depends on the willingness of citizens to redistribute resources via taxation, in line with Alesina and Rodrik (1994) and Perotti (1996 ). According to this political economy mechanism, increasing inequality will lead to lower availability of resources, as the rich will prefer not to contribute to public education, favoring private schools ( Mayer 2001 , 5). 10 Gutiérrez and Tanaka (2009) modeled the effect of inequality on school enrolment, and the preferred tax rate and expenditure per student focusing on parents’ decisions in developing countries. According to the authors, beyond a certain level of inequality, there is no longer support for public education. The model shows that, when considering the fact that parents can make a choice of sending their children either to work or to private or public schools, high inequality results in exiting public education, which has implications for the tax rate and expenditure per student. 11

According to the credit market imperfections’ channel discussed in section “How Inequality Affects Growth,” inequality creates obstacles in terms of access to education. In the presence of imperfect credit markets, the distribution of wealth affects the aggregate investment in human capital ( Galor and Zeira 1993 ; García-Peñalosa 1995 ). Additionally, inequality can affect enrolment by determining the number of poor who are able to substitute the return of child labor for school attendance ( Gutiérrez and Tanaka 2009 , 56). The Tanaka (2003) model shows that in contexts of high inequality, there is low support for public provision of schooling, which, in equilibrium, leads to a higher level of child labor.

The expected returns to the family from schooling will also affect the demand for education, as educated children are likely to have higher future income ( Birdsall 1999 , 17). If inequality is induced in part by increased returns to schooling, then there will be an incentive for children to stay in school and one could expect a positive relationship between an increase in inequality and educational attainment ( Mayer 2001 ; Thorbecke and Charumilind 2002 ; Dabla-Norris et al. 2015 ). 12

Inequality negatively affects health

The interest in understanding how income inequality affects health has instigated a broad range of work both in economics and in the fields of public health and sociology, 13 and different hypotheses are available. Generally, they suggest that inequality negatively affects health. Following O'Donnell, van Doorslaer, and van Ourti (2015) and Leigh, Jencks, and Smeeding (2011) , we distinguish between hypotheses that imply that the health of all individuals is affected and those that do not require that the health of every individual in society is under threat. 14

The first group of hypotheses proposes three different channels: public goods provision, social capital, and violent crime. 15 The effect through public goods provision can be negative or positive ( Leigh, Jencks, and Smeeding 2011 , 390). There will be a negative effect if inequality causes a reduction in the average value of publicly provided goods due to more heterogeneous preferences or if it enables the rich to acquire more political influence and, consequently, to pressure for a reduction in public spending on health. However, it can also be positive, given that as inequality increases among voters, the median voter will tend to support spending on health.

The effect through social capital builds on the assumption that income inequality leads to decreased social cohesion and, therefore, affects health through social 16 and psychosocial support, mechanisms of informal insurance, and diffusion of information ( O'Donnell, van Doorslaer, and van Ourti 2015 , 1501). Low trust can lead to disbelief about the improvements in health via public spending and links to higher mortality via smaller friendship networks as well ( Leigh, Jencks, and Smeeding 2011 , 390). Finally, although only a small percentage of deaths in developed countries results from violent crime, Leigh, Jencks, and Smeeding (2011 , 389) highlight the potentially larger secondary effects via increased stress about experiencing crime in the future. 17

In the second group of hypotheses, health depends on income at the individual level. The Wagstaff and van Doorslaer (2000) seminal review describes different interpretations. First, the absolute income hypothesis, which was also termed the “income artefact” hypothesis, suggests that the observed correlation between inequality and health is a result of the concave relationship between income and health; that is, the health gains of an additional unit of income are diminishing in an individual's income level. The term “artefact” applies to the fact that a redistribution of income leads to an increase in average population health even though there is no effect on the health of any individual, given their income. Second, the relative income hypothesis builds on the idea that psychosocial effects that result from individuals comparing their income with that of others (the mean income of the population or the community) affect health. Third, the deprivation hypothesis is a variation of the relative income hypothesis, and it argues that the crucial aspect is the extent of deprivation measured by the income gap. Fourth, and related, the relative position hypothesis states that what is important is the position of the individual in the income distribution.

How Inequality Affects Democratic Governance

In this section, we delve more deeply into the relationship between inequality and governance outcomes, democracy in particular, which have attracted considerable attention, especially within political economy and political science (see Bermeo 2009 ; Karl 2000 ). We start by focusing on the effects on democratic stability and democratic transition and then zoom in on the effects on political participation.

First, we refer back to the link between inequality and growth through political instability and social conflict described in section “High inequality has a negative effect on growth”. As highlighted by Fukuyama (2011 , 84), “[a] more likely reason why inequality is bad for growth is directly political: highly unequal countries are polarized between rich and poor, and the resulting social conflict destabilizes them, undermines democratic legitimacy, and reduces economic growth.” The summary in Thorbecke and Charumilind (2002 , 1486) suggests two main mechanisms: the relative deprivation hypothesis and resource mobilization. According to the first, discontent resulting from the gap between individual expected and achieved well-being leads to collective political violence. Inequality might deepen the grievances of certain groups or reduce the opportunity cost of engaging in violent conflict ( Dabla-Norris et al. 2015 , 9). Nevertheless, the second mechanism points to the ability of dissident groups to organize themselves as the key element.

The theoretical literature largely suggests negative effects of inequality on the likelihood of transition to and stability of democracy. It attributes an important role to democratic values and access to education, which are more likely to characterize citizens and the situation in equal societies, and to the middle class, which is more likely to promote tolerance and avoid extremist positions ( Houle 2015 , 145).

Two of the most prominent arguments for the link between inequality and democracy were presented in Boix (2003) and Acemoglu and Robinson (2006) . 18 The former argues that increasing levels of economic equality lead to a higher probability of democracy through redistribution. According to the theoretical predictions, the pressure for redistribution from the poor decreases with higher levels of equality, which means that a turn to democracy would be less costly for the holders of the most productive assets; that is, the payment of tax is less costly than repression.

The Acemoglu and Robinson (2006) predictions indicate a nonlinear, inverted U-shaped relationship. On the one hand, greater intergroup inequality increases the appeal of a revolution for citizens to increase their share in the income of the economy, thus increasing the likelihood of democracy. On the other hand, higher inequality also means higher aversion to democracy by elites as their tax burden is greater, thus discouraging democratization. Accordingly, the authors suggested that, for high levels of equality, there is no incentive for citizens to challenge the system and the interests of the elites are preserved. In societies with high levels of inequality, citizens try to rise up against the system, but this meets great repression from the elite, leading to a repressive non-democracy or a revolution, in certain cases. Therefore, the likelihood of democracy is higher for middle levels of inequality.

However, Houle (2009) highlighted three problems with these theories. First, they do not apply to transitions that are driven from above (e.g., from intra-elite competition). Second, the net effect of inequality is ambiguous because it makes redistribution more costly for the elites but, at the same time, it increases the population's demand for regime change. Finally, they ignore collective action problems and the challenges of mobilizing the population. More recently, Ansell and Samuels (2010) departed from Boix (2003) and Acemoglu and Robinson (2006) and proposed a contractarian approach that placed the focus on the citizens’ demand for protection against expropriation. According to these authors, democracy emerges from land equality and income inequality.

We briefly refer to a related group of studies examining the link from inequality to institutional quality and refer to Chong and Gradstein (2019) for details. Chong and Gradstein (2007 , 2019 ) argue that there is double causality: while inequality leads to subversion of institutions through the political power of the elite, poor institutional quality also causes a higher level of inequality. Furthermore, Kotschy and Sunde (2017) have proposed that inequality interacts with political institutions in shaping institutional quality. Some have also suggested that a link exists between inequality and corruption, via self-reinforcing mechanisms and social norms (e.g., Jong-sung and Khagram 2005 ) as well as via low trust (e.g., Rothstein and Uslaner 2005 ). 19

Finally, a strand of studies in political science has argued that there is a link between inequality and political participation. As reviewed in Solt (2008) , the theoretical predictions lead to different possible outcomes of economic inequality on political engagement 20 : a negative effect, a positive effect, or an effect that depends on the level of income of the individual. The first outcome is a result of the concentration of power: societies that are more unequal have a higher concentration of power, which has implications for how the issues that separate the rich from the poor are addressed in the political sphere. The rich will have a lower need to engage in the political process whereas the poor will feel removed from politics. The prediction of a positive effect results from the fact that the divergence in the views of the rich and the poor will be more apparent in societies with higher inequality, which should lead to higher participation in the political process. Finally, the last prediction hinges on the fact that political engagement entails the use of resources. Thus, with higher levels of inequality, one should expect greater engagement from the rich, who have more resources available, and lower political engagement from the poor. 21

We now move on to discuss the main insights from empirical analyses following the structure of the previous section. Although we focus here on cross-country analysis, which makes up a significant part of the evidence base, we also refer to studies examining these links at the regional level, especially in the United States.

Direct link

where |$g$| is the average annual growth rate, frequently measured as the log difference of gross domestic product (GDP) per capita; INEQ is a measure of income inequality (usually the Gini coefficient); Z m is a set of other variables commonly used in standard growth regressions; and u is the usual error term. This was then estimated, typically using basic ordinary least squares. To avoid reverse causation, inequality was measured at the beginning of the time span for growth, which usually considers a period of twenty to thirty years, and in some cases, authors employed instrumental variables to address endogeneity concerns.

Summary of results from selected empirical work testing the link between inequality and growth

Notes : DS, Deininger and Squire (1996) ; LIS, Luxemburg Income Study; OLS, ordinary least squares; 2SLS, two-stage least squares; WLS, weighted least squares; 3SLS, three-stage least squares; LSDV, least squares dummy variable; FE, fixed effects; RE, random effects; Sys-GMM, system GMM; Diff-GMM, difference GMM.

Source : Authors’ elaboration, inspired from Cingano (2014) and Neves and Silva (2014) .

The aim was to estimate the coefficient of the income inequality variable δ , and most of these studies found a negative effect of inequality on growth. Persson and Tabellini (1994) obtained evidence for this effect using historical panel data and postwar cross-sectional analysis. Both the studies by Alesina and Rodrik (1994) and Clarke (1995) confirm this relationship using data from, among others, Jain (1975) and Lecaillon et al. (1984) . Clarke (1995) showed that this was robust to different measures and empirical specifications.

Given the challenges imposed by scarce data, some authors turned to an analysis between states in the United States. Partridge (1997) tested the robustness of the Persson and Tabellini (1994) findings, and the results suggested a positive link between inequality and subsequent growth when considering either the Gini coefficient or the share of income of the middle quintile. 23 Using tax data at the state level for the period 1940–1980, Panizza (2002) warned that both the data and the methodology used led to significant differences in the estimated coefficients for the effect of inequality on growth.

While the quality and reliability of the data are important challenges pertaining to early studies ( Knowles 2005 ), the introduction of an improved and expanded dataset by Deininger and Squire (1996) led to a surge in new studies using panel estimators. In contrast with previous work, these studies found a positive link between inequality and growth. Li and Zou (1998) showed that the coefficient for lagged Gini has a positive sign and is significant in most growth regressions. Forbes (2000) confirmed this result using similar data and generalized method of moments (GMM) estimators. 24 Still, using the same dataset, Deininger and Squire (1998) found a negative effect of initial income inequality on growth, although the coefficient lost significance once they add regional dummies to the specification.

Offering a starting point to reconcile the differing views, some studies have argued that the relationship between inequality and growth depends on other factors. According to Barro (2000) , the effect of inequality on growth depends on the level of income of the country: panel evidence suggests growth-enhancing effects of inequality in richer countries (GDP per capita: above $2,000, 1985 US dollars) and negative effects in poorer countries (below $2,000). Moreover, Banerjee and Duflo (2003) have raised concerns about the functional form used in the literature, arguing against using a linear specification for the relationship between inequality and growth. Their empirical work suggests an inverted U-shaped function between changes in inequality and lower future growth rates. Using a small sample of industrialized countries, Voitchovsky (2005) showed empirical support for the hypothesis that the profile of inequality influenced its relationship with growth: top-end inequality seems to have a positive effect and bottom-end inequality a negative effect.

The debate has continued in the literature ever since. Cingano (2014) lends support to a negative effect of inequality on growth using data from the Organization for Economic Co-operation and Development (OECD) income distribution dataset. Additionally, the author suggests that reducing inequality by focusing on income disparities at the bottom of the income distribution has a greater positive effect on growth than by focusing on the top of the distribution. The Castelló-Climent (2010) results concur with this when considering the full sample of countries, but the results also find support for the argument of a differentiated effect according to the level of development. Halter, Oechslin, and Zweimüller (2014) argue that there is a time dimension to the link between inequality and growth, showing a positive coefficient for the current Gini coefficient and a negative coefficient for lagged Gini.

Some studies have used data from an additional dataset proposed by Solt (2009) , the Standardized World Income Inequality Database (SWIID). Yet, results also mirror the lack of consensus of earlier work. Applying system GMM, work from the International Monetary Fund finds a robust negative effect of inequality on growth ( Ostry, Berg, and Tsangarides 2014 ; Berg et al. 2018 ). While Gründler and Scheuermeyer (2018) concur with this result, Jäntti, Pirtillä, and Rönkkö (2020) raise concerns about the results in Berg et al. (2018) , resulting from the use of the SWIID dataset. El-Shagi and Shao (2019) criticize previous studies using system GMM and argue for the advantages of using a least-squares dummy variable estimation instead. In contrast, their results show a positive effect of inequality on growth over the medium term, primarily driven by market-based inequality.

Barro's (2000) view that the effect depends on the level of development in the country, confirmed in later analysis by the same author using the WIID dataset ( Barro 2008 ), has also been verified in some recent work. Gründler and Scheuermeyer (2018) see a negative and significant marginal effect of net inequality on growth in poor economies, which is, however, nonsignificant in high-income countries. 25

Channels of transmission

As discussed in section “How Inequality Affects Growth,” the theory proposes different channels through which inequality may affect growth. Although these specific mechanisms have received less attention in empirical work, we highlight the main findings, also summarized in  table 2 .

Summary of empirical evidence on the different channels linking inequality and growth

Starting with the savings channel, while there is evidence of a positive link between inequality and personal savings when using household micro-data, studies based on cross-country aggregate data have found mixed results (see references in Thorbecke and Charumilind, 2002 ). Barro (2000) found that the investment ratio does not depend significantly on inequality. The channel via market imperfections and borrowing constraints found support in Deininger and Squire (1998) , who added that the effect through the investment in human capital seems more important than that via physical capital, as well as to some extent in Perotti (1996 ). 26 This channel also suggests that asset inequality matters for growth ( Ravallion 2001 , 1810), shown in both Birdsall and Londoño (1997) and Deininger and Olinto (2000) .

Moreover, there is published support for the channels related to sociopolitical instability ( Perotti 1996 ). Using data from a sample of seventy-one countries over the period 1960–1985, Alesina and Perotti (1996) found that a wealthy middle class is associated with lower levels of political instability, conducive to higher investment. Keefer and Knack (2002) showed evidence of a negative effect of inequality on growth and suggested that property rights are an important channel for this relationship.

Perotti (1996 ) confirmed the link between inequality and growth via fertility. Testing the same hypothesis, de la Croix and Doepke (2003) used Deininger and Squire's (1996) improved dataset and showed that the negative and significant effect of initial inequality on subsequent growth does not survive the inclusion of the differential fertility variable, which is negative and significant. They interpret this as meaning that the differential fertility is an important factor explaining the link between inequality and growth.

The fiscal policy channel received less support by Perotti (1996 ) while Persson and Tabellini (1994) also obtained coefficients with the expected sign but statistically insignificant for the links from inequality to redistributive policies and from redistribution to growth. Sylwester (2000) showed results from cross-country analysis that indicated that higher inequality is associated with higher subsequent expenditures for public education relative to GDP, which in turn has a negative effect on current growth but a long-term positive impact.

Recent studies have shown evidence that corroborates the theoretical effects via human capital accumulation ( Berg et al. 2018 ), via credit market imperfections ( Gründler and Scheuermeyer 2018 ), and via fertility ( Berg et al. 2018 ; Gründler and Scheuermeyer 2018 ) as channels through which inequality affects growth. Using data from twenty-one OECD countries over the period 1870–2011, Madsen, Islam, and Doucouliagos (2018) find support for the hypothesis that income inequality affects growth through different channels, namely savings, investment, education, and ideas production. Additionally, they concur with the arguments on differentiated effects. Although the negative impacts are significant in financially underdeveloped countries, there is little effect of inequality on the four outcomes in countries with highly developed financial markets.

Education and Health

In a recent paper, Castells-Quintana, Royuela, and Thiel (2019) estimated the effects of the Gini coefficient on the human development index (HDI) and found a negative effect in the long run, whereas in the short run the results change for different components of the index: a positive effect on income and a negative effect on educational outcomes. Moreover, they concur with the aforementioned studies that found distinct effects depending on the level of development. We are not aware of any other studies pursuing a similar analysis for the HDI, but in the remainder of this section, we discuss the empirical results on the link between inequality and education and health. We summarize the main conclusions in  table 3 .

Summary of empirical evidence on the different hypotheses on the effects of inequality on education and health

Although there is an extensive body of empirical literature examining education as a determinant of income inequality, the evidence on the link from income inequality to educational outcomes is scarcer ( Thorbecke and Charumilind 2002 , 1488; Gutiérrez and Tanaka 2009 , 56). However, there is evidence that income inequality is reproduced in inequality in education, both in terms of achievements in primary and secondary school and in terms of access to tertiary education (see Buchmann and Hannum 2001 and references in Stewart 2016 ).

Regarding the links proposed in the theoretical work reviewed in the previous section, Sylwester (2000) reported a positive link between inequality and public expenditures on education. Considering the demand side, some studies have found a negative link between inequality and secondary school enrolment. Flug, Spilimbergo, and Wachtenheim (1998) and Easterly (2007) used cross-country analysis, while Esposito and Villaseñor (2018) used data from the 2010 Mexican Census. The study by Madsen, Islam, and Doucouliagos (2018) shows a negative impact of inequality on the combined primary, secondary, and tertiary school enrolment rate in financially underdeveloped countries (using a sample from OECD). Concurring with these findings, Berg et al. (2018) show a negative correlation between inequality and human capital, measured as the average years of primary and secondary schooling. Checchi (2003) provided support for the link between inequality and growth via borrowing constraints and showed evidence of a negative effect of inequality on access to secondary education. 27 Finally, using data from the United States for the period 1970–1990, Mayer (2001) found that the increase in inequality aggravates the gap in educational attainment between rich and poor children.

Given that the literature is extensive and stems from different fields of literature (including, public health), we summarize the main conclusions from different reviews, which distinguish between aggregate level and multilevel studies as well as cross-country and within-country empirical analyses. 28 Wagstaff and van Doorslaer (2000) highlighted that studies at the population level are limited in what they can reveal about the effects on individual health and that data at the individual level are required to disentangle the effects of the different hypotheses described in section “Inequality negatively affects health.” Still, existing evidence on these different channels remains inconclusive.

Lynch et al. (2004) found weak support for a direct effect of income inequality on health, although inequality contributes directly to some health outcomes (e.g., homicides). Furthermore, they underlined that the reduction of income inequality via income rises for the more disadvantaged contributes to improved health of these individuals and increases average population health. Rowlingson (2011) concludes that there is some evidence of an independent effect on health and social problems, but in line with Subramanian and Kawachi (2004) , also highlights the lack of consensus in the results and the need for further work. Still, from a systematic review of 155 published peer-review studies, Wilkinson and Pickett (2006) concluded that there is a link between greater income inequality and poorer health. Almost ten years later, the authors provided further support for the existence of a causal link between income inequality and health and reinforced their argument of the size of status and social class differences as an important mechanism ( Pickett and Wilkinson 2015 ).

The conclusions from the economics literature have pointed to no evidence of a causal relationship ( Nolan and Valenzuela 2019 ). From a detailed review of the literature, Deaton (2003 , 150) argued that “the stories about income inequality affecting health are stronger than the evidence” and that there is no robust evidence showing that income inequality in itself is an important determinant of population health, although it had effects through poverty. The review in Leigh, Jencks, and Smeeding (2011) concurred. However, they warned that given the data challenges and the limitations of the methods used to test the link between inequality and health, one should not jump to definite conclusions. Focusing on morbidity and mortality, the comprehensive review of empirical literature by O'Donnell, van Doorslaer, and van Ourti (2015) concludes that even though population health is negatively associated with income inequality, there is little evidence to support the hypothesis of a negative impact of income inequality on health.

We start this section by noting that the focus on voting underlying the political economy mechanism linking inequality and growth suggests that the effects should be observed in democracies ( Houle 2015 , 143). Thus, some of the early empirical literature on the relationship between inequality and growth also tested whether this effect was dependent on the regime type (e.g., see Alesina and Rodrik 1994 ; Persson and Tabellini 1994 ; Clarke 1995 ; Perotti 1996 ; Deininger and Squire 1998 ).

The results were mixed. Persson and Tabellini (1994) suggested that the negative link between inequality and growth is only present in democracies and that the transmission channel through government redistributive policies should be further investigated. However, Perotti (1996 ) counterargued that, although the data showed a stronger relationship between equality and growth in democracies, the effect of the democracy variable did not appear to be robust. Further criticism was advanced by Knack and Keefer (1997) , who, after some regime reclassification and deletion of doubtful observations, concluded that there is no evidence of a differential effect of inequality on growth in democracies and non-democracies. Østby (2013) and Stewart (2016) argued that there is compelling evidence for the link between horizontal inequality (i.e., inequality among groups) and civil conflict as well as other forms of group violence. However, more recent reviews suggest that the evidence on the link between inequality and political violence is mixed ( Lengfelder 2019 ).

We now turn to what the empirical evidence on the government outcomes described in section “How inequality affects democratic governance” shows, and summarize the main conclusions in  table 4 . Using data from two panels on the periods 1950–1990 and 1850–1980, Boix (2003) showed empirical evidence for a positive link between equality (proxied by an adjusted Gini coefficient) and democratization and, particularly, democratic consolidation. In an extension of this analysis, Boix and Stokes (2003) concluded that economic equality, proxied by farm ownership (distribution of agricultural property) and literacy rates (quality of human capital), has a positive effect on both the probability of a democratic transition and the stability of democracy.

Summary of empirical evidence on the effects of inequality on different governance outcomes

Others found low support for a significant link between the two (e.g., Bollen and Jackman 1985 ). 29 Barro (1999) showed a negative, but only marginally significant coefficient for the effect of inequality on democracy, proxied as electoral rights and civil liberties, for the period 1972–1995. However, when entered alongside the share of income accruing to the middle class, the coefficient is nonsignificant. The empirical analysis in Houle (2009) went against previous results on the negative link between inequality and democracy and showed a weak positive and nonsignificant relationship. Using the capital share of the value added in the industrial sector as a measure of inequality to overcome the data limitations in previous studies, the author also did not find support for Acemoglu and Robinson (2006) ’s inverted U-shaped relationship but rather for a weakly U-shaped one.

More recently, Haggard and Kaufman (2012) used causal process observation to examine the association between inequality and transitions to and from democratic rule and found limited evidence supporting the link via distributive conflict between elites and masses. Additionally, the evidence in Scheve and Stasavage (2017) does not support the hypothesis of a link between wealth inequality and democracy. Dorsch and Maarek (2020) offer an explanation for the abundancy of null results found for the link between inequality and democratization, showing that higher levels of inequality are associated with higher probabilities of democratic improvements following economic downturns (“windows of opportunity”). However, following growth periods, the effect of inequality is null or small and negative.

Considering a broader approach to governance, we briefly refer to the literature linking inequality and institutional quality. 30 Both Easterly (2007) and Chong and Gradstein (2007 ) tested the causal relationship between these variables using an instrumental variables approach and system GMM methods, respectively, and found support for the effect of inequality on institutions. More recently, Kotschy and Sunde (2017) showed evidence of the importance of equality as a determinant of the effect of democratic institutions on institutional quality, measured by an index of economic freedom and an indicator of civil liberties. 31 It has also been shown that countries with more income inequality have more corruption ( Jong-Sung and Khagram 2005 ), and, in particular, survey evidence links perceptions of corruption and inequality to lower political trust ( Uslaner 2017 ).

Finally, there is evidence from advanced industrial democracies of a negative link between inequality and political participation ( Lengfelder 2019 ). Solt (2008) showed a negative effect of economic inequality on political engagement, namely political interest, the frequency of political discussion, and participation in elections among all citizens except the richest, using data from advanced industrial countries. Using cross-sectional data from OECD countries and within-country data for Germany and a range of methods, the recent study by Schäfer and Schwander (2019) finds support for the negative link between economic inequality and political participation. Relatedly, empirical work suggests that economic inequality harms support for democracy (e.g., Andersen 2012 ; Krieckhaus et al. 2014 ) and political inequality (e.g., Houle 2018 ). Still, there appears to be limited evidence of an effect of inequality on electoral turnout ( Stockemer and Scruggs 2012 ; Cancela and Geys 2016 ).

The lack of consensus in the literature, especially about the effect of inequality on growth, is notable. What explains this divergence, and what can be done to contribute to the existing knowledge? In this section, we discuss the key empirical challenges of estimating the effects of inequality: data quality and availability, conceptual and measurement issues, and the methodological difficulties of dealing with confounding variables and endogeneity.

Data quality and availability

Early studies drew on secondary datasets provided, for example, by the World Bank ( Jain 1975 ) or the International Labour Office ( Lecaillon et al. 1984 ). The expanded dataset proposed by Deininger and Squire (1996) was crucial in opening possibilities for panel methods. Additionally, databases offering secondary data compilations on income inequality provided by the United Nations University World Institute for Development Economics Research, WIID (based on household surveys), and SWIID, developed by Solt (2020) and resulting from multiple imputations of the WIID data, have been frequently used in empirical studies. The World Inequality Database ( WID.world 2017 ) has emerged as an additional database providing data on income shares captured by top income groups.

Atkinson and Brandolini (2001 , 2009 ) and Ferreira, Lustig, and Teles (2015) offer comprehensive analyses on secondary datasets on income distribution, drawing attention to issues of data quality and consistency linked to differences in the definitions used, sources of data, and the processing used to obtain “ready-made” income distribution statistics. 32 Atkinson and Brandolini (2001 ) focused mainly on the Deininger and Squire dataset and on data for OECD member countries. Jenkins (2015) follows a similar line of reasoning and compares the WIID and the SWIID, noting that for the latter it is also critical to consider issues relating to the quality of imputations. Jäntti, Pirtillä, and Rönkkö (2020) stress that, in most developing countries, the actual redistribution is only rarely measured, so figures in the SWIID reflect questionable imputations.

As demonstrated in Atkinson and Brandolini (2001 , 2009 ) and Jenkins (2015) , issues of noncomparability have consequences for econometric analysis and for trends over time. Voitchovsky (2011 , 566) warns that data scarcity and limitations in terms of data availability may lead to a trade-off between sources of bias and precision in inequality studies. Ravallion (2001 , 1809) notes, however, that measurement errors, including those resulting from comparability problems, will have a greater impact on analyses that allow for country fixed-effects rather than on standard growth regressions given that the signal-to-noise ratio is likely to be low for changes in measured inequality.

The challenges are even more striking for tests that require data at the individual level, namely those related to the relative hypotheses linking inequality to health. These hypotheses also lead to questions about the appropriate reference groups—how they are defined and formed—as well as in terms of endogeneity, as the position of the individual in relation to the reference may be affected by group membership ( O'Donnell, van Doorslaer, and van Ourti 2015 , 1505).

Concept and measurement of inequality

Issues of concept and measurement are also consequential. 33 Atkinson and Brandolini (2001 ) provide a useful summary of eight parameters to be chosen when defining an income distribution, among which are the unit of observation, concept of resource (e.g., income versus expenditure), and tax treatment of income. These closely link to measurement choices. Different mechanisms require a specific concept of inequality and this should be reflected in the measure of inequality used in the empirical analysis ( Voitchovsky 2011 , 567). Additionally, different parts of the distribution receive importance depending on the inequality measure used, and even the concept of income is open to measurement issues ( Deaton 2003 , 135).

Knowles's (2005) account of the relationship between inequality and growth illustrates these concerns. The author warns that the results in previous studies should be regarded with some degree of caution given that they failed to measure inequality in a consistent manner, mixing measures of the distributions of income before and after tax and the distribution of expenditure. Considering six different measures of inequality (three Gini coefficients and three top ten income shares), a recent study by Blotevogel et al. (2020) shows that the choice of the inequality indicator has important implications for the results obtained in empirical analysis, namely when considering different transmission channels between inequality and growth. In terms of the link between inequality and democratic governance, there is a concern that frequently used measures do not capture interclass inequality, which precludes the testing of theoretical hypotheses that hinge on this ( Houle 2015 , 147).

Criticism has also been directed at specific measures, in particular the widely used Gini coefficient. In light of the observations above, Gini coefficients will provide different information depending on how they are calculated, for example, if based on net income or on gross income ( Houle 2015 , 147). Moreover, some have argued that the use of absolute rather than relative measures might better capture perceptions of inequality on the ground (e.g., Bosmans et al. 2014 ; Atkinson and Brandolini 2004 ; Niño-Zarazúa, Roope, and Tarp 2017 ).

Estimation methods

A review of empirical studies on the inequality–growth link highlights contrasting findings between the early cross-country studies and those that employed panel estimation techniques, after the Deininger and Squire (1998) dataset became available. Some explanations have been advanced for this divergence.

Measurement error may affect the estimation results in cross-country estimation (country- or regional-specific measurement error), and also in panel data estimation, given that inequality tends to be persistent over time; thus, this method relies on more limited time-series variation in the data. The coefficients in cross-country studies may be biased due to time-invariant omitted variables ( Voitchovsky 2011 , 565), while if we consider that inequality is related to underlying determinants of development that are persistent, then fixed-effect estimates may be biased upward when considering long-run effects ( Castells-Quintana, Royuela, and Thiel 2019 , 454).

Additional explanations included the argument for the misspecification of the linearity in the effect of inequality and growth ( Banerjee and Duflo 2003 ) and the suggestion that the two methods capture different time effects, given the short- and long-term lag structures in panel and cross-country analyses, respectively ( Voitchovsky 2011 , 565).

Finally, several concerns have been raised regarding the use of different instruments to tackle reverse causality in the relationship between inequality and growth (see Easterly 2007 ) as well as health ( O'Donnell, van Doorslaer, and van Ourti 2015 , 1505) and democracy ( Houle 2015 , 147). While different attempts have been made using instrumental variable approaches, finding a valid instrument for inequality is certainly not straightforward. Furthermore, even if GMM has often been used to try to tackle these issues, Roodman (2009) warns about the risk of instrument proliferation and the possibility for generating false-positive results. As an illustration, he reexamined the analysis in Forbes (2000) and raised concerns over the positive effect of inequality on growth found in the original paper.

This review combined the different theoretical hypotheses concerning the impact of inequality on three core socioeconomic and political outcomes in a simplified framework and highlighted the mixed empirical evidence. We summarize the main conclusions as follows. First, in line with previous findings, the debate on whether there is a positive or a negative effect on growth remains open, with recent studies mirroring the disagreement in decades of empirical work. With the exception of the classical approach, most of the transmission channels between inequality and growth point to a negative effect of inequality. However, the evidence from reduced-form equations is not consensual and the channels of transmission have received less attention.

Second, while there seems to be some consensus in the evidence that there is a negative link between inequality and secondary school enrolment, there is need for further research in terms of other education outcomes. Although theory generally points toward a negative effect of inequality on health, the existing evidence does not provide clear support to this relationship, in the economic literature in particular, and there is a lot to be uncovered in terms of the mechanisms of transmission at the individual level. Third, theoretical predictions and empirical evidence show mixed results for the effects of inequality on democracy and political participation.

In understanding the diversity and divergence in theoretical and empirical results, a number of empirical challenges remain. Problems with data quality and availability are well understood in the literature, as are those related to the concept and measurement of inequality, and the shortcomings of different estimation methods.

In terms of potential avenues for future work, our review points for one to the value of further attention to different transmission channels (highlighted in  figure 1 ). We first propose a methodological suggestion. While advances in econometric analysis will shed light on the analysis across countries, this could be complemented with the use of experimental work to understand specific channels in particular contexts. While not a substitute for empirical cross-country analysis, experiments can be employed to understand microlevel behavior. The controlled nature of this work avoids biases in econometric studies and mitigates issues of endogeneity and measurement errors.

The second avenue relates to the focus of the analysis. While this review mainly concentrated on cross-country analysis, there is indication that disaggregating the level of analysis might provide useful insights in terms of channels of transmission and underlying cases. For instance, it might be that in Africa, competition over natural resources is the main driver of inequality and in turn slower growth, while in Latin America, inequality may be the main driver for political instability. Furthering regional and country-specific analysis might help dig deeper into these effects.

Finally, despite the existing efforts to compile new—and improve on the existing—secondary datasets, problems persist with the available data. Thus, in light of the importance of data availability and reliability for the analysis of the trends and effects of inequality, we stress that earlier calls for more and better data continue to be both relevant and important for progress in our search for better understanding of the impact of inequality.

Equity here refers to equality of opportunities to pursue a life of one's choosing and protection from extreme deprivation in outcomes ( World Bank 2006 , 18–19). Efficiency refers to economic efficiency, underpinning economic growth ( Thorbecke 2016 ).

Given the multidimensionality of inequality and that its effects are in focus in different disciplines, we follow an interdisciplinary approach. Yet, in the empirical section, we focus on strands of work that employ similar (quantitative) methodologies.

We focus on the main arguments that have attracted attention in these disciplines and have made a concerted effort to address the gender citation gap that exists, for instance, in international relations scholarship (e.g., Maliniak, Powers, and Walter 2013 ).

Throughout, we refer to “income inequality” and “inequality” interchangeably. Although we recognize the multidimensionality of the concept, we focus on literature considering income inequality, which remains a dominant measure ( Stewart 2016 , 64), and refer to more extensive work on other aspects, in particular, the relevance of poverty rates (e.g., Ravallion 2012 ), inequality of opportunity (e.g., Marrero and Rodriguez 2013 ; Ferreira et al. 2018 ), gender inequality (e.g., Bandiera and Natraj 2013 ; Kabeer 2015 ), and horizontal inequalities ( Stewart 2005 ).

We use “growth” and “economic growth” interchangeably.

We highlight that there is expanding work on different facets of economic performance, such as growth volatility (e.g., Iyigun and Owen 2004 ) or the occurrence of crises (e.g., Morelli and Atkinson 2015 ).

Kuznets (1955) argued that the early stages of the development process would experience rising inequality, which would then fall as the country reached higher levels of per capita income. This relationship, known as the “Kuznets curve,” and other work looking at this direction of causality are not covered here.

See also a review of early studies in Bénabou (1996) and Aghion, Caroli, and García-Peñalosa (1999 ) and a more recent overview in Ehrhart (2009) .

Sandmo (2015) reviews the history of theories of income distribution, from Adam Smith until the 1970s.

For a summary of theoretical work on the choice between a public and a private education system, see García-Peñalosa (1995) .

Gutiérrez and Tanaka (2009) review previous theoretical models.

Additional mechanisms relate to social comparison and include relative deprivation and gratification in the context of neighborhood and school effects, and economic segregation ( Mayer 2001 ). The first refers to the fact that people compare themselves with those who are more disadvantaged, which in the case of children can lead to feeling less willing to study or stay in school and in the case of parents can cause stress and alienation. The second suggests that increases in inequality are likely to lead to more geographic segregation as the rich and poor have less in common. See Mayer (2001 , 4–7) for more details.

See Deaton (2003 ) and Lynch et al. (2004) for detailed descriptions of the emergence of debate on the link between income inequality and health.

We do not cover studies on the link between inequality and homicides and between inequality and life satisfaction and happiness ( Graham 2014 ).

Lynch et al. (2004 , 15–16) refer to additional nuances, related to the effects of inequality through psychosocial processes and through the differential accumulation of exposures deriving from material sources rather than from perceptions of disadvantage. They also mention the weak and strong versions of this hypothesis proposed by Mellor and Milyo (2002) .

For a study on the effects of inequality on group participation, see La Ferrara (2002) .

Thorbecke and Charumilind (2002) review the evidence and causal mechanisms linking inequality and crime.

For a review of the theoretical arguments developed earlier, see Bollen and Jackman (1985) .

This line of reasoning can be linked to the work by Glaeser, Scheinkman, and Shleifer (2003) mentioned in section “How inequality affects growth,” which discusses the negative effects of inequality on growth through institutional subversion (including corruption).

For further details, see Solt (2008 , 48–50).

It is also useful to refer here to studies examining the impact of inequality on electoral turnout (e.g., Stockemer and Scruggs 2012 ), support for democracy (e.g., Andersen 2012 ; Krieckhaus et al. 2014 ), and, more generally, political inequality (e.g., Houle 2018 ).

A more complete list of studies is available from the authors.

Studies in the 1990s also focus on determining whether there was a differential effect of inequality on growth in democracies and non-democracies ( Persson and Tabellini 1994 ; Alesina and Rodrik 1994 ; Perotti 1996 ; Clarke 1995 ; Deininger and Squire 1998 ). We discuss this in Section ”Governance.”

Two recent studies build on Forbes (2000) , attempting to overcome some of the remaining estimation challenges. Aiyar and Ebeke (2020) draw attention to the importance of considering equality of opportunity and find empirical support for their hypothesis that the negative effect of income inequality is greater in countries with low levels of equality of opportunity (measured by intergenerational mobility). Scholl and Klasen (2019) replicate Forbes’ (2000) finding but show that it disappears once they control for the experience of transition countries.

Islam and McGillivray (2020) highlight the increasing interest in wealth inequality and investigate its effect on growth using wealth data from Forbes Magazine and Credit Suisse over the period 2000–2012. The results suggest a negative effect.

Perotti (1996 ) empirically tested the channels of transmission, estimating different structural models: first, using each of these channels in a growth model and, then, estimating the effects of inequality on each of the channels.

With the exception of Flug, Spilimbergo, and Wachtenheim (1998) , all these studies employ the Gini coefficient as one of their measures of inequality. Flug, Spilimbergo, and Wachtenheim (1998) used the ratio of the income shares of the top quintile to the bottom two quintiles of the population, and the shares of income accruing to the top quintile and the lowest quintile were used, respectively, by Easterly (2007) and Checchi (2003) . In their robustness checks, Esposito and Villaseñor (2018) used the Atkinson and Theil indices.

We do not offer a comprehensive overview of the measures used in the literature. According to the review in Lynch et al. (2004) , the majority of the studies employ the Gini coefficient or different shares of income. In the list of studies reviewed by these authors, we counted sixty-nine out of ninety-eight using the Gini as (one of) the measure(s) of inequality.

The review of the initial studies in Bollen and Jackman (1985) argued that problems of specification, measurement, and sample composition led to inconclusive results in the existing empirical analyses.

Savoia, Easaw, and McKay (2010) reviewed the arguments linking inequality to institutional quality directly and via democracy and argued that the limited existing work suggests a negative link between inequality and institutions, noting there is a need for further research.

When considering the role of governance (using different indicators), the estimates in Islam and McGillivray (2020) indicate that improved governance may contribute to reduced wealth inequality and higher growth.

See also discussions of these shortcomings in Deaton (2003 ), Voitchovsky (2011) , and Houle (2015) .

As illustrated in section “What the empirical evidence says,” issues of concept and measurement for our outcome variables also matter to consideration of theories and hypothesis testing.

This study was prepared within the project “The impacts of inequality on growth, human development, and governance - @EQUAL.” Support by the Novo Nordisk Foundation Grant NNF19SA0060072 is acknowledged.

We are grateful to the editors and three anonymous referees for insightful and useful suggestions. We thank Anustup Kundu for excellent research assistance as well as Klarizze Puzon, Miguel Niño-Zarazúa, Carlos Gradín, and participants at an internal project workshop for valuable comments. The usual caveats apply.

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Globalisation and Inequality (Revision Essay Plan)

Last updated 1 May 2018

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Here is an answer to the following question: "Evaluate the extent to which globalisation inevitably leads to a rise in income inequality in one or more countries of your choice."

Essay On Globalisation And Inequality (Download a pdf version of this essay)

Globalisation is a process through which countries, businesses and people become more inter-connected and inter-dependent via an increase in trade in goods and services, cross-border investment and labour migration from one nation to another. Income and wealth inequality can be measured in various ways including the Gini coefficient and the Palma Ratio. The latter is a good indicator of the depth of inequality since it tracks incomes flowing to the top ten percent of households and divides by the incomes for the bottom forty percent. In South Africa, that figure is 7.1 whereas for Germany the Palma Ratio is just over 3.

One way globalisation can increase inequality is through the effects of increasing specialisation and trade. A rise in trade-to-GDP ratios signifies an increase in the volume and value of trade between countries and regions. Although trade based on comparative advantage has the potential to stimulate economic growth and lift per capita incomes, it can also lead to a rise in relative poverty. For example, if a country can now import cheaper steel from elsewhere, then there will be a contraction in domestic supply and a fall in employment and real incomes in that industry. This can lead to higher rates of structural unemployment and a decline in real living standards. Real wages come under downward pressure and inequality can increase. We see this in regions of the UK for example where de-industrialisation has taken place leading to much higher rates of long-term unemployment and a worsening of economic and social deprivation. In the United States, the share of national income claimed by the top 1% of the population climbed from 11% in 1980 to 20% in 2014, compared to just 13% for the entire bottom half of the population. 

However, one could argue that the benefits of globalisation can be used to offset this. If trade generates faster GDP growth, then the government will see an increase in tax revenues which might then be used to fund capital investment in public goods and merit goods and services including finance for re-training programmes and improvements to infrastructure in economically-depressed areas. Much depends on whether a government has sufficient resources and political will to implement an active regional and industrial policy to improve employment prospects for those negatively affected by globalisation.

Globalisation might also increase inequality because it usually leads to higher profits for multinational corporations such as Apple, Google and Facebook which feed into generous pay-outs for senior executives and increasing dividends for shareholders. Multinationals matter - they generate 10 percent of the world’s annual GDP and more than 50 percent of the value of world trade. One of the hot political and economic issues of the age has been the ability of businesses operating in more than one country (a transitional company) to use shadow pricing and other forms of legal tax avoidance to reduce their liability to pay tax and thereby increase the return to those with an equity stake. Because of tax avoidance, national governments do not generate the revenues needed to pay for public services and welfare systems - both of which can have a progressive effect on the final distribution of income. The UK government has estimated that, in 2017, multinational businesses managed to avoid paying nearly £6 billion in tax revenues. Oxfam estimates that tax avoidance costs developing countries $170 billion a year whereas $100 billion could provide an education for 124 million children and pay for healthcare services that could prevent the deaths of at least six million children annually.

In evaluation, there are steps that governments can take to increase their tax take. This can range from introducing country-by-country financial reporting so that it becomes clearer where the profits are being made, to introducing restrictions on interest rates charges from one subsidiary of a TNC to another. There are also moves to reduce the amount of intra-company loans made by TNCs which can shift profits to countries with lower corporation tax. In the US, they have introduced a one-off tax on the off-shore cash held by US businesses after it was found that US companies had built up almost $2.6tn in untaxed cash held offshore. Developing countries can also improve their governance so that multi-nationals investing pay a proper rent for the ownership of land and are less vulnerable to corruption from elected officials.

A third way in which globalisation can create increased inequality is by increasing the demand for and returns to higher-skilled work and lowering the expected earnings of people in relatively low-skill and low-knowledge occupations. One of the driving forces of foreign direct investment is that resources tend to flow where the unit cost of production is lowest. This is the case with light manufacturing for example where a lot of investment is flowing to countries such as Vietnam, Bangladesh, Ethiopia and Indonesia. FDI creates more formal employment and incomes for people employed in these sectors but perhaps at the expense of similar workers in higher-income countries whose skills are no longer in such demand. They are therefore at greater risk of unemployment and persistent relative poverty; many have been pushed into poorly paid jobs in services linked to the Gig Economy. People affected often feel that they have been left behind by the forces of globalisation and their votes may have been a factor behind the Brexit outcome and the election of Trump who has adopted a “protectionist approach” to trade policy since becoming President.

That said, it could be argued that it is technological progress – which has raised demand for skilled workers relative to unskilled workers – rather than trade and globalisation which has had most impact on these workers. Often the people who lose jobs as a result of technology are not the ones who get the new ones and the result can be hysteresis in the labour market with deep pockets of long-term unemployment and hit relative poverty. Automation threatens many jobs - ranging from fork-lift drivers to workers in farming and production lines. The onus is on government to implement and fund the right supply-side policies designed to improve the human capital of people affected including lifting investment in human capital and entrepreneurship.

Final reasoned comment

In conclusion, it is not inevitable that globalisation increases inequality of income and wealth. We have seen big changes in the workforce and in earnings between different groups but in my view, these are not solely the consequence of globalisation. One paradox of globalisation is that it has probably reduced inequality between countries but increased it within nations. What matters is how governments respond to the challenge of improving access to knowledge and skills and in making sure that the benefits from cross-border trade and investment provide enough tax revenues to pay for high quality and affordable public services. In this way, more of the positives from globalisation can be turned into a ‘public good’ rather than a ‘public bad’.

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5 Essays to Learn More About Equality

“Equality” is one of those words that seems simple, but is more complicated upon closer inspection. At its core, equality can be defined as “the state of being equal.” When societies value equality, their goals include racial, economic, and gender equality . Do we really know what equality looks like in practice? Does it mean equal opportunities, equal outcomes, or both? To learn more about this concept, here are five essays focusing on equality:

“The Equality Effect” (2017) – Danny Dorling

In this essay, professor Danny Dorling lays out why equality is so beneficial to the world. What is equality? It’s living in a society where everyone gets the same freedoms, dignity, and rights. When equality is realized, a flood of benefits follows. Dorling describes the effect of equality as “magical.” Benefits include happier and healthier citizens, less crime, more productivity, and so on. Dorling believes the benefits of “economically equitable” living are so clear, change around the world is inevitable. Despite the obvious conclusion that equality creates a better world, progress has been slow. We’ve become numb to inequality. Raising awareness of equality’s benefits is essential.

Danny Dorling is the Halford Mackinder Professor of Geography at the University of Oxford. He has co-authored and authored a handful of books, including Slowdown: The End of the Great Acceleration—and Why It’s Good for the Planet, the Economy, and Our Lives . “The Equality Effect” is excerpted from this book. Dorling’s work focuses on issues like health, education, wealth, poverty, and employment.

“The Equality Conundrum” (2020) – Joshua Rothman

Originally published as “Same Difference” in the New Yorker’s print edition, this essay opens with a story. A couple plans on dividing their money equally among their children. However, they realize that to ensure equal success for their children, they might need to start with unequal amounts. This essay digs into the complexity of “equality.” While inequality is a major concern for people, most struggle to truly define it. Citing lectures, studies, philosophy, religion, and more, Rothman sheds light on the fact that equality is not a simple – or easy – concept.

Joshua Rothman has worked as a writer and editor of The New Yorker since 2012. He is the ideas editor of newyorker.com.

“Why Understanding Equity vs Equality in Schools Can Help You Create an Inclusive Classroom” (2019) – Waterford.org

Equality in education is critical to society. Students that receive excellent education are more likely to succeed than students who don’t. This essay focuses on the importance of equity, which means giving support to students dealing with issues like poverty, discrimination and economic injustice. What is the difference between equality and equity? What are some strategies that can address barriers? This essay is a great introduction to the equity issues teachers face and why equity is so important.

Waterford.org is a nonprofit organization dedicated to improving equity and education in the United States. It believes that the educational experiences children receive are crucial for their future. Waterford.org was founded by Dr. Dustin Heuston.

“What does equality mean to me?” (2020) – Gabriela Vivacqua and Saddal Diab

While it seems simple, the concept of equality is complex. In this piece posted by WFP_Africa on the WFP’s Insight page, the authors ask women from South Sudan what equality means to them. Half of South Sudan’s population consists of women and girls. Unequal access to essentials like healthcare, education, and work opportunities hold them back. Complete with photographs, this short text gives readers a glimpse into interpretations of equality and what organizations like the World Food Programme are doing to tackle gender inequality.

As part of the UN, the World Food Programme is the world’s largest humanitarian organization focusing on hunger and food security . It provides food assistance to over 80 countries each year.

“Here’s How Gender Equality is Measured” (2020) – Catherine Caruso

Gender inequality is one of the most discussed areas of inequality. Sobering stats reveal that while progress has been made, the world is still far from realizing true gender equality. How is gender equality measured? This essay refers to the Global Gender Gap report ’s factors. This report is released each year by the World Economic Forum. The four factors are political empowerment, health and survival, economic participation and opportunity, and education. The author provides a brief explanation of each factor.

Catherine Caruso is the Editorial Intern at Global Citizen, a movement committed to ending extreme poverty by 2030. Previously, Caruso worked as a writer for Inquisitr. Her English degree is from Syracuse University. She writes stories on health, the environment, and citizenship.

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About the author, emmaline soken-huberty.

Emmaline Soken-Huberty is a freelance writer based in Portland, Oregon. She started to become interested in human rights while attending college, eventually getting a concentration in human rights and humanitarianism. LGBTQ+ rights, women’s rights, and climate change are of special concern to her. In her spare time, she can be found reading or enjoying Oregon’s natural beauty with her husband and dog.

Inequality Within Countries is Falling: Underreporting-Robust Estimates of World Poverty, Inequality and the Global Distribution of Income

Household surveys suffer from persistent and growing underreporting. We propose a novel procedure to adjust reported survey incomes for underreporting by estimating a model of misreporting whose main parameter of interest is the elasticity of regional national accounts income to regional survey income, which is closely related to the elasticity of underreporting with respect to income. We find this elasticity to be substantial but roughly constant over time, implying a large but relatively constant correction to survey-derived inequality estimates. Underreporting of income by the bottom 50% of the world income distribution has become particularly important in recent decades. We reconfirm the findings of the literature that global poverty and inequality have declined dramatically between 1980 and 2019. Finally, we find that within-country inequality is falling on average, and has been largely constant since the 1990s.

We thank Ruchi Avtar and Marie Camara for outstanding research assistance. We thank Leonardo Gasparini and Leopoldo Tornarolli for sharing with us standardized regional survey data for multiple Latin American countries through SEDLAC. We thank Arvind Subramanian for guiding us to the "junked" report of the 2017 Indian NSS. We thank numerous staff members at the Luxembourg Income Study for help using their data. We thank Christoph Lakner for sharing with us code for using the Luxembourg Income Study data. The views expressed in this paper are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York, the Federal Reserve System, or the National Bureau of Economic Research. Any errors or omissions are our own.

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Poverty and Inequality in the World, Essay Example

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Poverty and inequality are two matters at all times influencing one another. Undoubtedly, where there is poverty there is also inequality happening on a social level.  These two terms, applied when discussing society in its entirety, are utilized to describe how inequality on an economical level affects social statuses, making room for let us say lucky groups, the ones able to afford almost anything and the unlucky, those who can barely make it from one day to another. Thereof, these two terms describe the cause and effect of the economic system, however complex it might be.

The main actors included in this process are, actually, the people living in the society and, also, the system at work in the society, by means of which people can or cannot get advantage insofar as to make their lives better. The actors included in the inequality process are, therefore, people on the one hand and, on the other hand, the economic system active in a particular society. This is exactly why the matter could not be discussed generally, but applied to each country in part.

The main focus of each scholar is that of identifying the most efficient strategies by means of each poverty to be avoided and inequality disposed of. However, given the complexity of the problem and the variety of variables which influence it, my standpoint is that no general strategy can be found, no strategy which, if applied anywhere, could solve such a sensitive matter. More precisely, distinct solutions should be sought and applied, afterwards, in each country in part.  I do not ignore the fact that relevant insights could be derived from one country which could aid solve the problem in another country, but that is not, under no circumstance, enough. In other words, global citizenship philosophy should be understood as the point of departure for the struggle of highlighting the efficient solutions towards eliminating inequality in societies.

Thereof, the main question I wish to bring to debate is that of identifying whether it would be more relevant that a united team of researchers would study a corpus of distinct societies in order to put together a strategy which would help eliminate inequality or that the same team of researchers would study the same country and its society, irrespective of the other insights derived from distinct societies, with the same scope. This question parts from the discussions in ”Globalization. A very short introduction”, by Manferd B. Steger. This made me realize that such a scope implies a numerous of variables to be taken into consideration and, however, contextualization, especially at a time in which globalization is rapidly escalating.

Probably, the most important aspect of such a research consists of the capabilities of the specialists of identifying the exact characteristics of each society in part which would affect, in any way, the rise of inequality. The presupposition stands clear. Each society has characteristics that influence the economic process, some of which are the great historical moments it went through, the collective mentality, the political system, the social intake of the differences between people, from the ways in which one can go from one social status to another until the way in which women are being viewed in comparison to men. Thereof, the question I propose stands relevant from the point of view that the strategy which, for example, would be applicable in a society in which women are expected to be paid far less than men occupying the very same positions would not be efficient in a society in which women are already highly emancipated and are not expected to be stay-at-home mothers for a long period of time.

Steger, B. “Manfred. Globalization: A Very Short Introduction.”

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Best Discrimination Essay Examples

Global inequality.

1021 words | 4 page(s)

Introduction Currently, the society is experiencing a widening gap of inequality. One of the most crucial indicators of this global inequality is the gap existing between the rich and the have-nots. It is imperative to note that this gap is widening especially in the advanced economies. In addition to the above, global inequality is demonstrated in the emerging markets and the developing countries. Milanovic proposes that the primary forms in which such differences is illustrated in the variation in the level of access to finance, education, and healthcare (3). As a response to this increased inequality, researchers and scholars have engaged in heated debates aimed at finding amicable solutions.

Macroeconomic Concerns Outcomes and Opportunities Ortiz and Cummins’s findings indicate that it is imperative to note that global inequality creates variations in outcomes and opportunities for the affected nations (7). The inequality in outcome is measured regarding income and wealth. This is the primary reason nations who are poor have low income and minimal wealth. In such a case, nations that are developed have these riches and income. On the other hand, opportunities can be measured regarding the jobs available in various industries. In essence, it is worth mentioning that developed countries have a high level of employment as compared to the developing nations.

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Is Inequality A Necessary Evil? Milanovic reveals that some degree of inequality is acceptable (6). This is mainly because it sets the stage for nations to compete and excel. For instance, the difference in education allows people to move from one place to another whereby facilities are considered as better. In such situations, the movement allows people interact leading to cultural diversity. As sell, this plays a crucial role in the enhancement of economic growth. In addition to the above, competition due to inequality can provide nations with the incentive to innovate. This is mainly to ensure that they overcome the competitors. In the long run, such innovative solutions play a crucial role in the enhancement of economic growth.

Why Is Rising Global Inequality a Concern Pickett and Wilkinson maintain that there are several reasons the increased global inequality has raised concern (320). One of the major issues is that lack of outcomes has contributed to the lack of jobs. In such a situation, people can end up being jobless despite their qualifications and competence. As a result, this will promote dubious activities with the principal aim of securing employment. In the long run, inequalities have contributed to increased cases of nepotism, corruption, and mismanagement of government resources.

Income Distribution Matters for Economic Growth It is profound to note that income inequality has contributed heavily to the collapse of the economy of the affected regions. As such, to ensure economic growth and development it is imperative that global inequality is solved.

Factors Driving Higher Income Inequality Technological Change Dabla-Norris et al., present arguments to emphasize that one of the most significant leaders contributing to higher income inequality is technological change (5). There are several benefits that have been brought about by technological advancement. The most common advantage is that technology enhances performance and productivity. This is the primary reason companies in highly developed countries are using technology. As well, it is worth mentioning that technology drives the skill premium in the countries that apply them. As a result of the same, this has contributed to increased labor income inequality. The main reason for this effect is that technology raises the demand for skilled labor. On the contrary, it lowers the need for low-skilled labor leading to the inequality. Technology has created this kind of inequality since it mainly automates the jobs as well as upgrading the required skills. As such, several employees are replaced while others are trained.

Trade Globalization According to Milanovic trade globalization is the other factor that has substantially contributed to high-income inequality (199). Technological advances have played a crucial role in the process of promoting globalization. This is mainly because it allows countries to conduct business over the internet through the strategies such as the E-Commerce and E-Business. The main challenge of globalization is that it has negatively impacted on the income of low-skilled labors. This is mainly because highly skilled employees are required to control the globalized transactions. In the case of developing countries whereby low-skilled labor is abundant, the demand can as well increase leading to lower income inequality.

Financial Globalization Thirdly, financial globalization is the other factor that has contributed to higher income inequality. The advantage of financial globalization is that it promotes financial risk sharing. As well, it has been noted that increased financial flows facilitate income inequality, especially for the emerging markets.

Education On the other hand, Pickett and Wilkinson establish that education can be elemental in the reduction of income inequality (317). Firstly, education determines the occupational choice. In essence, the educated people determine the employment choices based on their careers. In addition to the above, education increases access to employment opportunities mainly because it equips the learner will the necessary skills to perform the required tasks.

Conclusion In conclusion, several strategies can be implemented to overcome global inequality. One of the most crucial strategies is to promote education. Education policies need to be reformed to ensure that access to education is enhanced. Secondly, global inequality can be reduced through safe financial inclusion. Greater inclusion, especially in the developing countries, will be vital. Finally, fiscal policy can be a significant tool in reducing global inequality. This is mainly because such policy ensures micro financial stability leading to the protection of the disadvantaged population.

• Dabla-Norris, Ms Era, et al. Causes and consequences of income inequality: a global perspective. International Monetary Fund, 2015.
• Milanovic, Branko. Worlds apart: Measuring international and global inequality. Princeton University Press, 2011.
• Milanovic, Branko. The Haves and the Have-Nots: A brief and idiosyncratic history of global inequality. ReadHowYouWant. com, 2010.
• Milanovic, Branko. “Global income inequality in numbers: In history and now.” Global policy 4.2 (2013): 198-208.
• Pickett, Kate E., and Richard G. Wilkinson. “Income inequality and health: a causal review.” Social Science & Medicine 128 (2015): 316-326.
• Ortiz, Isabel, and Matthew Cummins. “Global Inequality: Beyond the bottom billion–A rapid review of income distribution in 141 countries.” Available at SSRN 1805046 (2011).

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Inequality in Society: Conflict and Functionalism Theories Essay

Introduction, conflict and functionalism theories, challenge to social equality.

There is no question that inequality is prevalent in all sorts of human society. No matter the level of human development, inequality seems to be existent. It is even present in simple cultures where there is minimal variation in wealth.

Some individuals in such cultures may have privilege because of their prowess in certain skills such as hunting, medicine or access to ancestral power. In modern societies, inequality manifests in social and economic classes, power, income, access to health facilities, academic, gender and other forms. Social economical classes are the most common in most societies and have attracted attention from many sociologists. Many societies try to address the class issue but with little success.

Even socialist and communist governments that try to eliminate social economic classes fail to achieve equality. In Canada today, inequality is evident in various forms. Social economic classes, income variation, health, academic, ethnic, gender and other forms of inequality are obvious in the country. In the essay, I will join other sociologists in trying to address the persistent question “why inequality exist?”

Inequality, also referred to as social stratification, has been a core subject to sociologists for many years (Macionis and Linda 2010). Sociologists try to understand, explain and prescribe solutions to the issue of inequality. Despite of major sociologists such as Max Weber, Karl Marx and others trying to prescribe solution to inequality, the issue continues to persist. Marx was critical of capitalism and accused it of existence of social classes.

On the other hand, Weber agreed with Marx that economic interests led to social classes but viewed social stratification in terms of class, prestige and power. There are mainly two schools of thought to the issue of inequality: conflict and functional theories. To understand why inequality exists, it is helpful to review the divergent positions presented by the two theories and try to come up with a reconciling position.

Conflict and functionalism theories are the main theories trying to provide answers to why inequality exists in the society. The two theories take fundamentally different approaches to explain the issue. Functionalism theory views inequality as unavoidable and important to the society while conflict theory considers inequality to result from conflict and coercion in the social system (Andersen and Taylor 2006).

To functionalism sociologists, society is a system of parts with each part having useful contribution to the system. According to the theory, society can be compared to human body where various parts such as lungs, hands, heart, and eyes contribute to functionality of the body as a whole.

The way the social system maintains itself is of more interest to functionalist sociologists than specific interactions between the different parts of the system. To functionalists, inequality is unavoidable and leads to some good to the society. The theory assumes that any pattern in social system has its good purposes. Considering occupations, functionalists justify inequality in rewards by asserting that the rewards reflect the importance of the different occupations to the system.

For instance, functionalists would explain the high rewards and respect given to some occupations such as doctors, scientists and judges as compared to other occupations such farming and garbage collections, by saying that the former occupations are more important to the society as a whole. In addition, they would claim that such occupations require much talent, effort and education. Therefore, the high reward is meant to encourage individuals to take the pain to occupy such important positions.

Conflict theory provides the other extreme explanation to inequality in society. Unlike functionalism theory, conflict theory compares society to war. Conflict theory sociologists consider the society to be held together by conflict and coercion among members of the society.

According to Ridney (2001), conflict theory likens society to battlefield where members compete for control of limited resources and power. Unlike functionalists that stratify the society to functional parts that cooperate for the good of the society, conflict theory views society as consisting of competing parts (Rigney 2001).

The theorists, led by Karl Marx, consider social classes to result from blocked opportunities rather than talent and effort. While functionalists justify unequal rewards for different occupations as a way to utilize important talents and abilities, conflict theorists consider stratification in the society to limit utilization of talents from lower class. To conflict theorists, stratification in the society does not have positive contribution to the society.

Conflict and functionality theories on inequality shed light into causes of social stratification but do not completely explain the situation. The society can be viewed both as functional parts and as competing parts. Doctors, lawyers, scientists, carpenters, farmers, garbage collectors, cooks and other occupations are important to the society.

As functionalists argue, some occupations such as medicine require more effort and many years of preparation. It is therefore reasonable to reward doctors, judges and other such occupations highly to motivate individuals to occupy them. It is also natural to give respect and honor to individuals with unique and important skills. For instance, if a country has a single neurosurgeon, the surgeon would be valued and respected without asking for it.

However, it should be appreciated that other occupations that are considered less important, such as farming, are vital to sustainability of a society. Functionalism therefore makes sense when the society is considered as a system without deep consideration of individual members of the system. For instance, the theory cannot provide a convincing explanation to why some individual strive for wealth and power, since amassing wealth and power is not always good for the society.

Conflict theory provides a more practical explanation to inequality. Competition is a central thing in the society. Individuals compete for scarce resource, recognition, power and prestige (Macionis 2001). Considering scenario of a school, students compete for attention from their teacher, to be included in their school’s base-ball team, to top their class academically, to win scholarship for high education and many other things.

At individual lever, a student chooses an occupation mostly not by its contribution to the society but by reward and prestige that would come with it. In business, an individual is mostly motivated by the power and prestige that go along with wealth rather than importance of their service to the society. Conflict theory can explain competition in school, business, politics, and other occupation and social stratification that result. Bottom-line to stratified society, in fact, is the human propensity to gain dominion over others.

Attaining social equality is a major objective for human right bodies across the globe. However, that objective is not easy to achieve considering various manifestation of inequality in the world. In Canada, despite of various steps taken to ensure equality in various forms, inequality persists.

Social equality implies all people in a society having equal status. At minimum social equality implies equal rights to all individual in a society. The state however is not easy to achieve mostly because of historic inequality that already exist. For instance, although Canadian constitution guarantees equal rights to quality health and education, there is evident inequality in health and education.

Individuals in upper social economic classes have resources to access high standard of health services and afford quality education for themselves and for their children. Limited interaction between individuals from different social class makes it hard to achieve equality.

Individuals in upper social class tend to relate more with individuals in the same social class while individuals in other social classes do the same. Therefore, there is little chance for an individual to cross over from on social class to another (Horowitz 1997). In addition, individuals in privileged social class have resources, power and influence to maintain the status quo of inequality.

Division of labor has high contribution to inequality. Different occupations attract varying rewards and therefore contribute to inequality. Occupations such as medicine, engineering and law tend to attract high rewards as compared to other occupations as gardening. Even in occupations requiring relatively equal years of training, rewards seem to vary (Loseke 1999).

For example, despite of going through almost equal years of training, a teacher is likely to earn less as compared to an engineer. In addition, division of labor leads to some occupations being considered superior to others therefore promoting social stratification.

Individuals from different social economic classes may understand inequality differently. A wealthy individual can consider social inequality proportional to creativity and effort that an individual exerts in his endeavors. The rich may consider their fortune to result from their hard work and consider poverty to result from laziness and lack of initiative. On the other hand, a poor person can view social stratification to result from social injustice.

In conclusion, there is no obvious answer to why inequality exists in society. Inequality continues to exist even in countries with high level of human development as Canada. Functionalism and conflict theories can however help understand social stratification. To functionalists, social stratification is not necessarily evil but serves an important function in the society. On the other hand, conflict theory explains inequality to result from competition in society.

Without regard to how inequality comes about, it is obvious that high level of inequality is dehumanizing and can lead to social evils such as crime. It is therefore important to minimize inequality as much as possible. To promote social equality, an enabling environment that exposes all individuals to equal opportunities is necessary.

Andersen, Margaret and Howard Taylor. 2006. Sociology: the essentials . New York: Cengage Learning.

Horowitz, Ruth.1997. “Barriers and Bridges to Class Mobility and Formation: Ethnographies of Stratification”. Sociological Methods and Research 25 (1):495-538.

Loseke, Donileen. 1999. Thinking about Social Problems: An Introduction to Constructionist Perspectives . New York: Aldine de Gruyter.

Macionis, John and Linda Gerber. 2010. Sociology, 7 th Canadian edition. Toronto: Pearson Education Canada.

Macionis, John. 2001. Sociology , 8 th edition. Upper Saddle River, NJ: Prentice-Hall.

Rigney, Daniel. 2001. The Metaphorical Society: An Invitation to Social Theory . Lanham, MD: Rowman & Littlefield.

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Gender Inequality Essay

500+ words essay on gender inequality.

For many years, the dominant gender has been men while women were the minority. It was mostly because men earned the money and women looked after the house and children. Similarly, they didn’t have any rights as well. However, as time passed by, things started changing slowly. Nonetheless, they are far from perfect. Gender inequality remains a serious issue in today’s time. Thus, this gender inequality essay will highlight its impact and how we can fight against it.

  About Gender Inequality Essay

Gender inequality refers to the unequal and biased treatment of individuals on the basis of their gender. This inequality happens because of socially constructed gender roles. It happens when an individual of a specific gender is given different or disadvantageous treatment in comparison to a person of the other gender in the same circumstance.

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Impact of Gender Inequality

The biggest problem we’re facing is that a lot of people still see gender inequality as a women’s issue. However, by gender, we refer to all genders including male, female, transgender and others.

When we empower all genders especially the marginalized ones, they can lead their lives freely. Moreover, gender inequality results in not letting people speak their minds. Ultimately, it hampers their future and compromises it.

History is proof that fighting gender inequality has resulted in stable and safe societies. Due to gender inequality, we have a gender pay gap. Similarly, it also exposes certain genders to violence and discrimination.

In addition, they also get objectified and receive socioeconomic inequality. All of this ultimately results in severe anxiety, depression and even low self-esteem. Therefore, we must all recognize that gender inequality harms genders of all kinds. We must work collectively to stop these long-lasting consequences and this gender inequality essay will tell you how.

How to Fight Gender Inequality

Gender inequality is an old-age issue that won’t resolve within a few days. Similarly, achieving the goal of equality is also not going to be an easy one. We must start by breaking it down and allow it time to go away.

Firstly, we must focus on eradicating this problem through education. In other words, we must teach our young ones to counter gender stereotypes from their childhood.

Similarly, it is essential to ensure that they hold on to the very same beliefs till they turn old. We must show them how sports are not gender-biased.

Further, we must promote equality in the fields of labour. For instance, some people believe that women cannot do certain jobs like men. However, that is not the case. We can also get celebrities on board to promote and implant the idea of equality in people’s brains.

All in all, humanity needs men and women to continue. Thus, inequality will get us nowhere. To conclude the gender inequality essay, we need to get rid of the old-age traditions and mentality. We must teach everyone, especially the boys all about equality and respect. It requires quite a lot of work but it is possible. We can work together and achieve equal respect and opportunities for all genders alike.

FAQ of Gender Inequality Essay

Question 1: What is gender inequality?

Answer 1: Gender inequality refers to the unequal and biased treatment of individuals on the basis of their gender. This inequality happens because of socially constructed gender roles. It happens when an individual of a specific gender is given different or disadvantageous treatment in comparison to a person of the other gender in the same circumstance.

Question 2: How does gender inequality impact us?

Answer 2:  The gender inequality essay tells us that gender inequality impacts us badly. It takes away opportunities from deserving people. Moreover, it results in discriminatory behaviour towards people of a certain gender. Finally, it also puts people of a certain gender in dangerous situations.

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Opinion Nicholas Kristof

The Case for Hope

Credit... Cecilia Carlstedt

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By Nicholas Kristof

Opinion Columnist

• May 9, 2024

Mr. Kristof is the author of a new memoir, “Chasing Hope: A Reporter’s Life,” from which this essay is adapted.

More than three-quarters of Americans say the United States is headed in the wrong direction. This year, for the first time, America dropped out of the top 20 happiest countries in the World Happiness Report. Some couples are choosing not to have children because of climate threats. And this despair permeates not just the United States, but much of the world.

This moment is particularly dispiriting because of the toxic mood. Debates about the horrifying toll of the war in Gaza have made the atmosphere even more poisonous, as the turmoil on college campuses underscores. We are a bitterly divided nation, quick to point fingers and denounce one another, and the recriminations feed the gloom. Instead of a City on a Hill, we feel like a nation in despair — maybe even a planet in despair.

Yet that’s not how I feel at all.

What I’ve learned from four decades of covering misery is hope — both the reasons for hope and the need for hope. I emerge from years on the front lines awed by material and moral progress, for we have the good fortune to be part of what is probably the greatest improvement in life expectancy, nutrition and health that has ever unfolded in one lifetime.

Many genuine threats remain. We could end up in a nuclear war with Russia or China; we might destroy our planet with carbon emissions; the gap between the wealthy and the poor has widened greatly in the United States in recent decades (although global inequality has diminished ); we may be sliding toward authoritarianism at home; and 1,000 other things could go wrong.

Yet whenever I hear that America has never been such a mess or so divided, I think not just of the Civil War but of my own childhood: the assassinations of the 1960s; the riots; the murders of civil rights workers; the curses directed at returning Vietnam veterans; the families torn apart at generational seams; the shooting of students at Kent State; the leftists in America and abroad who quoted Mao and turned to violence because they thought society could never evolve.

If we got through that, we can get through this.

My message of hope rubs some Americans the wrong way. They see war, can’t afford to buy a house, struggle to pay back student debt and what’s the point anyway, when we’re boiling the planet? Fair enough: My job is writing columns about all these worries.

Yet all this malaise is distorting our politics and our personal behaviors, adding to the tensions and divisions in society. Today’s distress can nurture cynicism rather than idealism, can be paralyzing, can shape politics by fostering a Trumpian nostalgia for some grand mythical time in the past.

The danger is that together all of us in society collectively reinforce a melancholy that leaves us worse off. Despair doesn’t solve problems; it creates them. It is numbing and counterproductive, making it more difficult to rouse ourselves to tackle the challenges around us.

The truth is that if you had to pick a time to be alive in the past few hundred thousand years of human history, it would probably be now.

When I step back, what I see over the arc of my career is a backdrop of progress in America and abroad that is rarely acknowledged — and that should give us perspective and inspire us to take on the many challenges that still confront us.

I think of a woman named Delfina, whom I interviewed in 2015 in a village in Angola. She had never seen a doctor or dentist and had lost 10 of her 15 children. Delfina had rotten teeth and lived in constant, excruciating dental pain. She had never heard of family planning, and there was no school in the area, so she and all the other villagers were illiterate.

A young journalist following in my footsteps today may never encounter a person like Delfina — and that’s because of the revolution in health care, education and well-being that we are in the middle of, yet often seem oblivious to.

I have implored President Biden to do more for the children and babies dying in Gaza. I’ve been unwavering about the need to support the people suffering bombardment in Ukraine . And I regularly report on the conflicts and humanitarian disasters in Sudan, Myanmar, Yemen and elsewhere that garner less attention.

Some people see my career covering massacres and oppression and assume that I must be dour and infused with misery, a journalistic Eeyore. Not so! Journalism is an act of hope. Why else would reporters rush toward gunfire, visit Covid wards or wade into riots to interview arsonists? We do all this because we believe that better outcomes are possible if we just get people to understand more clearly what’s going on. So let me try with you.

Just 100 years ago, doctors could do nothing when President Calvin Coolidge’s 16-year-old son developed a blister on a toe while playing tennis on the White House court. It became infected, and without antibiotics the boy was dead within a week. Today the most impoverished child in the United States on Medicaid has access to better health care than the president’s son did a century ago.

Consider that a 2016 poll found that more than 90 percent of Americans think that global poverty stayed the same or got worse over the previous 20 years. This is flat wrong: Arguably the most important trend in the world in our lifetime has been the enormous reduction in global poverty.

About one million fewer children will die this year than in 2016, and 2024 will probably set yet another record for the smallest share of children dying before the age of 5. When I was a child, a majority of adults were illiterate, and it had been that way forever; now we’re close to 90 percent adult literacy. Extreme poverty has plunged to just 8 percent of the world’s population.

Those are statistics, but much of my career has been spent documenting the revolution in human conditions they represent. In the 1990s I saw human traffickers openly sell young girls in Cambodia for their virginity; it felt like 19th-century slavery, except most of these girls were going to be dead of AIDS by their 20s. Trafficking remains a huge problem, but the progress is manifest. In Kolkata, India, where I’ve covered this issue for decades, one study found an 80 percent reduction in the number of children in brothels since 2016.

Two decades ago, AIDS was ravaging poor countries, and it wasn’t clear we would ever control it. Then America under President George W. Bush started a program, Pepfar , that allowed the world to turn the corner on AIDS globally, saving 25 million lives so far. One reason you don’t hear much about AIDS today is that it’s among the great successes in the history of health care.

It’s not just that the world has in our lifetimes seen the greatest improvement in human wellness that we know of since the birth of our species. Despite some setbacks for democracy — and real risks here in the United States — I’ve learned to doubt despotism in the long run.

One of my searing experiences as a young journalist was covering that terrible night in June 1989 when Chinese Army troops turned their automatic weapons on unarmed protesters in Tiananmen Square, including the crowd that I was in. You never forget seeing soldiers use weapons of war to massacre unarmed citizens; I still have my notebook from that night, stained with the sweat of fear.

“Maybe we’ll fail today,” my scribbles record, as I quoted an art student nearly incoherent with grief. “Maybe we’ll fail tomorrow. But someday we’ll succeed.”

Yet I also remember a day five weeks earlier in the democracy movement, April 27, 1989, when Beijing students prepared for a protest march from the university district to Tiananmen.

Students knew that if they marched, they were risking expulsion, imprisonment or worse. The evening before, some students spent the night writing their wills in case they were killed.

I drove out to the university district that morning and saw roads lined with tens of thousands of People’s Armed Police. I slipped onto the Beijing University campus by pretending to be a foreign student and watched as a frightened band of 100 students emerged from a dormitory, parading with pro-democracy banners. Gradually other students joined in, and perhaps 1,000 marched, clearly terrified, toward the gate. Rows of armed police blocked their way, but the students jostled and pushed and finally forced their way onto the road. To everyone’s surprise, the police didn’t club the students or shoot them that day. Once the vanguard broke through, thousands more students materialized to join the march.

Word spread rapidly. As the marchers passed other universities, tens of thousands more joined the protest march, and so did ordinary citizens. Old people shouted encouragement from balconies and shopkeepers rushed out to give drinks and snacks to protesters. The police tried many times to block the students, but each time huge throngs of young people forced their way through.

By the time they reached Tiananmen Square, the protesters numbered perhaps half a million. Then they marched triumphantly back to their universities, hailed by the people of Beijing screaming support. That evening at the gate of Beijing University, the students were met not by phalanxes of armed police but by white-haired professors waiting for them, crying happy tears, cheering for them.

“You are heroes,” one professor shouted. “You are sacrificing for all of us. You are braver than we are.”

It was a privilege to witness the heroism of that day. There is much to learn from the commitment to democracy shown that spring by Chinese students.

The exhilaration of that march to Tiananmen Square didn’t last. But in my reporting career, I’ve learned first to be careful of betting on democracy in the short run, and second, to never bet against it in the long run.

Some day, I hope to see the arrival of democracy in China, as well as in Russia, Venezuela and Egypt.

Commentators are always predicting the end of American primacy. First it was the book “Japan as No. 1” in 1979 by Ezra F. Vogel, then Patrick Buchanan’s 2002 right-wing “The Death of the West” and Naomi Wolf’s 2007 leftist “The End of America.” It seemed for a time that Europe might surpass us, while in the longer run China appeared poised to overtake America and become the world’s largest economy.

Yet the United States maintains its vitality. World Bank figures suggest that the United States has actually increased its share of global G.D.P., measured by official exchange rates, by a hair since 1995. Europe today is leaderless and has anemic growth. Japan, China and South Korea are losing population and lagging economically. “Uncle Sam is putting the rest of the world to shame,” The Economist noted recently.

China’s struggles today are particularly important, for it was China that was the foremost challenger to American pre-eminence. Many people around the world thought that China had a more vibrant political and economic model. Yet today China is struggling and even with its population advantage it is no longer clear that China’s economy will ever eclipse America’s. The United States is the undisputed titan in the world today.

As I see it, the possibility of a Donald Trump election hangs as a shadow over America. Yet even if Trump were elected, there is a dynamism and inner strength in America — in technology, culture, medicine, business, education — that I think can survive four years of national misrule, chaos and subversion of democracy. Indeed, Trump might wreck Europe and Asia — by abandoning NATO and Taiwan — even more than he would damage America, in a way that would perversely cement U.S. primacy.

Note that one of the dominant issues in this year’s general election will be immigration. That’s partly because of the determination of people around the world to come to America, just as my dad risked his life to escape Eastern Europe and make his way here in 1952. Desperate foreigners sometimes see our nation’s resilience more clearly than we do.

I have seen that faith in America in surprising places, even when I periodically slipped into Darfur to cover the genocide there in the 2000s. I couldn’t obtain a government pass to get through checkpoints, but I realized that U.N. workers were showing English-language credentials that the soldiers surely couldn’t read. So I put my United Airlines Mileage Plus card on a lanyard, drove up to a checkpoint and showed it — and the soldiers waved me through.

Recklessness caught up with me, and eventually I was stopped at a checkpoint and kept in a detention hut decorated with a grisly mural of a prisoner being impaled by a stake through the stomach. It was a frightening wait as the soldiers summoned their commander. He eventually arrived and ordered me released — and then one of my captors who previously had seemed ready to execute me sidled up.

“Hi,” he said. “Can you get me a visa to America?”

I share the view that a Trump election would pose immense damage to American political and legal systems. But in the scientific world we would continue to move forward with new vaccines for breast cancer, new drugs to combat obesity and new CRISPR gene-editing techniques to treat sickle cell and other diseases.

How can we weigh democratic decline against lives saved through medical progress? Of course we can’t. As my intellectual hero, Isaiah Berlin , might say, they are incommensurate yardsticks — but that does not mean that they are irrelevant to our well-being.

And no one can accuse me of ignoring the problems that beset us at home and abroad, for they have been my career. They’ve left me a bit too scarred to be a classic optimist. Hans Rosling, a Swedish development expert, used to say that he wasn’t an optimist but a possibilist. In other words, he saw better outcomes as possible if we worked to achieve them. That makes sense to me, and it means replacing despair with guarded hope.

This isn’t hope as a naïve faith that things will somehow end up OK. No, it is a somewhat battered hope that improvements are possible if we push hard enough.

In 2004 I introduced Times readers to the story of an illiterate woman named Mukhtar Mai, whom I met in the remote village of Meerwala in Pakistan. She had been gang-raped on order of a village council, as punishment for a supposed offense by her brother, and she was then expected to disappear in shame or kill herself. Instead, she prosecuted her attackers, sent them to prison and then used her compensation money to start a school in her village.

Instead of giving in to despair, Mukhtar nursed a hope that education would chip away at the misogyny and abuse of women that had victimized her and so many others. Then she enrolled the children of her rapists in her school.

Mukhtar taught me that we humans are endowed with strength — and hope — that, if we recognize it and flex it, can achieve the impossible.

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Nicholas Kristof became a columnist for The Times Opinion desk in 2001 and has won two Pulitzer Prizes. His new memoir is “ Chasing Hope: A Reporter's Life .” @ NickKristof

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