What are the major causes of income inequality?  And what factors have contributed to greater income inequality since 1970? 

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krishna-agrawala | College Teacher | (Level 3) Valedictorian

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Incomes may be compared between different set of people, and the extent of inequality as well as the reason for such inequality will depend very much on the situations of the groups being compared. For example we can compare incomes of people in  ways such as within a company, across between companies, between different industries in an economy, between different countries or  economies. We can also use different criteria for forming the groups to be compared. For example, we can compare disparities of income between members of different sexes and different races.

Here, I have listed some of the reasons that may contribute to inequality of income between different countries.

  • The natural resources such as minerals, and natural vegetation available in each country.
  • Other natural advantages enjoyed by a countries. For example, a country situated along a major trade route is likely to benefit from transportation and trade across their country.
  • History of past economic development of countries. For various reasons reasons industrialization, development of technologies, and development of trade in different countries happens at different times and at different rates. Among others this is dependent on political situation and government of countries.
  • Current political and legal situation of a country.
  • Current culture of the people. This influence the effectiveness of the people of the countries to act in various roles such as entrepreneurship, businessmen, and members of organizations.

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