What is income inequality?

Income inequality describes how unevenly income is shared across people in a country. If everyone earned the same, inequality would be zero; if one person earned everything, it would be at its maximum. Real societies sit somewhere between, and the interesting questions are where, whether it is moving, and why.

Is it actually rising?

In the United States, the best long-run evidence says yes — with a twist. Using tax records going back to 1913, Thomas Piketty & Emmanuel Saez (2003) showed that the share of income going to the top earners was very high before 1929, fell sharply through the Depression and World War II, stayed low for decades, and then began climbing again around 1980. Economists call that shape a "U": high, low, high again.

That pattern matters because for fifty years the default expectation was the opposite. Simon Kuznets (1955) had proposed that inequality rises as a country industrializes and then falls as it matures — an inverted U. The post-1980 re-rise in rich countries, after they had supposedly finished the downward slope, is the central puzzle modern inequality research tries to explain.

It is also not one global story. Anthony B. Atkinson et al. (2011) extended the tax-data method across more than twenty countries and found that English-speaking countries reversed the mid-century decline far more sharply than continental Europe or Japan — even though all of them faced similar technology and trade shocks.

Why should a non-economist care?

Because inequality is not only about the rich. Raj Chetty et al. (2017) measured something most people feel directly: the share of children who grow up to earn more than their parents. For Americans born in 1940 it was about 90 percent; for those born in the 1980s, about 50 percent. Their analysis found that how growth was distributed explained more of that decline than how fast the economy grew.

What this site does not do

We do not tell you what policy should follow from any of this. Where researchers disagree — and they disagree about a lot, from the causes of inequality to whether it slows growth — we present both sides on our Perspectives pages and say plainly that the question is open.

Go deeper

• How is inequality measured? — Gini coefficients, top-income shares, and why the data source matters.
• The Kuznets curve — the hypothesis everything else responds to.