Income Inequality: Implications and Relevant Economic Policies

Abstract

The aim of this contribution is to discuss closely the implications of income inequality and the economic policies to tackle it, especially so in view of inequality being one of the main causes of the 2007/2008 international financial crisis and the “great recession” that subsequently emerged. Wealth inequality is also important in this respect, but the focus is on income inequality. Ever since the financial crisis and the subsequent “great recession”, inequality of income, and wealth, has increased and the demand for economic policy initiatives to produce a more equal distribution of income and wealth has become more urgent. Such reduction would help to increase the level of economic activity as has been demonstrated again more recently. A number of economic policy initiatives for this purpose will be the focus of this contribution.

Key words: Income inequality, Economic activity, Redistribution of income, Economic policies.
JEL: D31, E25, E61.