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Inequality matters
discusses these impacts and concludes that the many adverse consequences of inequality affect the well-being not only of those at the bottom of the income distribution, but also those at the top. Specifically, inequality leads to a less stable, less efficient economic system that stifles economic growth and the participation of all members of society in the labour market (Stiglitz, 2012). With high income inequality, the rich control a greater share of the income. As richer households typically spend a smaller share of their income than the poor, this unequal concentration of income and wealth reduces aggregate demand and can slow down economic growth. Inequalities also pose a serious barrier to social development by slowing the pace of poverty reduction. Inequality limits opportunities for social mobility, including intergenerational mobility. Income inequality leads to uneven access to health and education and, therefore, to the intergenerational transmission of unequal economic and social opportunities, creating poverty traps, wasting human potential, and resulting in less dynamic, less creative societies. Inequality also increases the vulnerability of societies (and, especially, of particular groups within societies) to economic crises and prolongs the time it takes to recover from such crises. These varied impacts can combine to generate potent sources of social tension, fertile ground for political and civil unrest, instability and heightened human insecurity. Inequality is also an issue of social justice. People want to live in societies that are fair, where hard work is rewarded, and where one’s socioeconomic position can be improved regardless of one’s background. A unique contribution of the present Report is that it zeroes in, in Chapter 4, on the challenges facing disadvantaged and marginalized social groups, and draws particular attention to the issue of social justice. It examines the distinct impacts of inequalities on youth, older persons, persons with disabilities, indigenous peoples and migrants. The disadvantages faced by these groups reinforce one another. Young people and older persons across the globe experience a broad range of disadvantages that are associated with their age. Indigenous peoples generally fare worse than the non-indigenous in every socioeconomic dimension. There are also significant social inequalities between persons with disabilities and the general population in educational and health outcomes and in access to full and productive employment and decent work opportunities. Migrants also face manifold disadvantages, including discrimination. Disadvantages are greater among women than among men within these groups. The chapter draws attention to the measures policymakers should take to identify disadvantaged groups, and implement policies addressing different social groups’ needs to combat inequalities effectively. The global financial and economic crisis and its aftermath (see Chapter 3) have added urgency to the need to address inequalities and their consequences. Draconian fiscal austerity programmes still dominate attempts to reduce sovereign debt in many developed countries, and a growing number of developing countries are cutting public expenditure. Popular discontent has grown and trust in Governments is dwindling, even in countries with consolidated democracies,