3.3.3—Reasons for inequality

Inequality can arise from differences in education and skills, labour-market bargaining power, inheritance and asset ownership, discrimination, technology, tax systems and access to opportunities.

These causes interact: a family with assets can finance education, while unequal schooling can shape future income. Distinguish a cause from an observed correlation.

Automation may raise demand for skilled labour and returns to capital while reducing demand for routine work, widening some income gaps.

No single cause explains all inequality; country context, time period and the chosen income/wealth measure matter.