Inequality in the global economy

Question 1

What is inequality of opportunity?

Answer 1

Disparities in life outcomes due to factors beyond an individual’s control (e.g., family background, gender, race).

Question 2

What is inequality of effort?

Answer 2

Differences in outcomes resulting from personal choices and actions.

Question 3

What are examples of inequality of opportunity?

Answer 3

Education, gender discrimination, race/ethnicity, access to healthcare.

Question 4

What is inequality of income?

Answer 4

Differences in earnings; easy to measure but doesn’t reflect lifetime or informal income.

Question 5

What is inequality of wealth?

Answer 5

Differences in accumulated resources over time, including savings and inheritance.

Question 6

What is inequality of consumption?

Answer 6

Differences in spending; harder to measure and doesn’t account for public goods.

Question 7

What is inequality of happiness or utility?

Answer 7

Based on subjective well-being; difficult to define and measure.

Question 8

What is global inequality?

Answer 8

Inequality among all individuals worldwide, regardless of nationality.

Question 9

What is between-country inequality?

Answer 9

Based on average income/wealth of countries.

Question 10

What is within-country inequality?

Answer 10

Income distribution within a single country; most relevant for policy.

Question 11

What is the Gini coefficient?

Answer 11

A measure of income inequality based on the Lorenz curve; ranges from 0 (equality) to 1 (inequality).

Question 12

What does the Lorenz curve show?

Answer 12

The share of total income earned by different segments of the population

Question 13

What does Piketty suggest as a better measure?

Answer 13

Share of income/wealth going to the top decile (e.g., top 10%).

Question 14

How has income inequality changed since 1980?

Answer 14

It has increased globally, especially in the US.

Question 15

What share of global income does the top 10% earn (2022)?

Answer 15

52%.

Question 16

What share of global income does the bottom 50% earn (2022)?

Answer 16

Less than 10%.

Question 17

Which regions have the highest and lowest top 10% income shares?

Answer 17

Highest: Middle East, India; Lowest: Europe, China.

Question 18

What are historical causes of inequality in many regions?

Answer 18

Legacies of slavery, colonialism, and racial discrimination.

Question 19

What causes inequality in the Middle East?

Answer 19

Modern capitalism and oil wealth concentration.

Question 20

What are the two main sources of individual income?

Answer 20

Labour and capital.

Question 21

What causes capital income inequality?

Answer 21

Differences in wealth (k) and rates of return (r).

Question 22

What causes labour income inequality?

Answer 22

Differences in ability, effort, and luck.

Question 23

What is a hyperpatrimonial society?

Answer 23

A society with extreme wealth concentration through inheritance.

Question 24

What is a hypermeritocratic society?

Answer 24

A society dominated by superstars and high earners based on merit.

Question 25

What caused the sharp drop in capital income inequality in the 20th century?

Answer 25

Destruction of capital during the World Wars and the Great Depression.

Question 26

Has wealth concentration returned to pre-1914 levels?

Answer 26

No, it remains high but has not fully recovered.

Question 27

How is capital distributed compared to labour income?

Answer 27

Capital is much more concentrated; the bottom 50% owns little wealth.

Question 28

What is the trend in capital ownership today?

Answer 28

Increasing concentration as the wealth/income ratio rises.

Question 29

What is the US known for in terms of inequality?

Answer 29

Booming top labour incomes.

Question 30

What is Europe known for in terms of inequality?

Answer 30

Booming wealth concentration.

Question 31

What are the three forces driving wealth inequality? (Piketty, 2014)

Answer 31

Global tax competition Growth slowdown and technical change Unequal access to high financial returns

Question 32

What four factors explain rising US inequality? (Piketty, 2015)

Answer 32

Unequal access to education Exploding top managerial pay Cuts in top income tax rates Routine-based technological change

Question 33

How do income and wealth inequality interact?

Answer 33

Rising labour income inequality fuels future wealth concentration.

Question 34

What is a proven tool to reduce inequality?

Answer 34

Progressive income taxation.

Question 35

What inheritance tax rate does Piketty suggest?

Answer 35

50–60%.

Question 36

What is the Global Financial Register (GFR)?

Answer 36

A proposed global wealth tax to combat tax evasion and inequality.

Question 37

What is key to reducing bottom-half income stagnation?

Answer 37

Equal access to education and good-paying jobs.