3.4.5—Causes of inequality and poverty

Education, labour markets, ownership, discrimination, technology, geography, institutions and shocks can shape inequality and poverty.

Causes interact: unequal schooling can limit skills, wages and wealth accumulation over time.

Trace a mechanism and distinguish structural from temporary causes.

Automation raises demand for skilled workers while displacing routine jobs.

Do not attribute inequality to one cause without evidence.

Trace interacting channels: unequal opportunity and human capital affect jobs and wages; unequal resource ownership compounds rent, profit and wealth; discrimination and unequal status or power restrict access; tax and benefit rules redistribute or reinforce gaps; globalisation and technology change relative labour demand; and market-based supply-side policies may raise efficiency while weakening protection or bargaining power. A recession can push vulnerable households into absolute poverty, but persistent inequality usually has several structural causes.