As recently as 1975, developed countries were 10-times richer than developing nations. Although there have been improvements in the last 40 years, and overall income distribution inequality has decreased, we still have a very long way to go to create a level playing field. The following infographic discusses the main causes of economic inequality and provides an insight into measures that are making a positive impact.
According to the infographic, economic inequality occurs for two main reasons. The first is that returns on investment are greater than overall economic growth. This essentially means that the wealthy “tend to” get richer.
The second is a decrease in global population growth rates. The population of the world has increased year on year since the 1700s, but the rate has slowed since 1960. By 2100, the growth rate could fall to 0.1% compared to 2.1% in the 1960s. In developed countries, economic growth declined in the 1980s and ‘90s due to slow population growth and high return levels.
As well as a gap between the developed and developing world, there is also concern about an increase in inequality within developed nations. Statistics suggest that just 1% of the population owns 40% of national wealth, for example.
In response to these issues, the some propose measures including the introduction of a living wage and higher income tax rates for top earners. Creating more democratic trade policies and encouraging union membership could also help to close the gap. Union membership fell from 34% in 1979 to 10% in 2016.
Take a closer look at the infographic below to find out more about potential solutions:
Infographic Created By this infographic