social inequality in the world essay

Rising inequality: A major issue of our time

Subscribe to global connection, zia qureshi zia qureshi senior fellow - global economy and development.

May 16, 2023

Income and wealth inequality has risen in many countries in recent decades. Rising inequality and related disparities and anxieties have been stoking social discontent and are a major driver of the increased political polarization and populist nationalism that are so evident today. An increasingly unequal society can weaken trust in public institutions and undermine democratic governance. Mounting global disparities can imperil geopolitical stability. Rising inequality has emerged as an important topic of political debate and a major public policy concern.

High and rising inequality

Current inequality levels are high. Contemporary global inequalities are close to the peak levels observed in the early 20th century, at the end of the prewar era (variously described as the Belle Époque or the Gilded Age) that saw sharp increases in global inequality.

Over the past four decades, there has been a broad trend of rising income inequality across countries. Income inequality has risen in most advanced economies and major emerging economies, which together account for about two-thirds of the world’s population and 85 percent of global GDP (Figure 1). The increase has been particularly large in the United States, among advanced economies, and in China, India, and Russia, among major emerging economies.

Figure 1. Inequality has risen in most advanced and major emerging economies Richest 10% income share, 1980-2020

Source: Author, using data from World Inequality Database . Note: Pre-tax national income. Some data points are extrapolated.

Beyond these groups of countries, the trend in the developing world at large has been more mixed, but many countries have seen increases in inequality. In regions such as Latin America, the Middle East and North Africa, and sub-Saharan Africa, income inequality levels on average have been relatively more stable, but inequality was already at high levels in these regions—the highest in the world.

Wealth inequality within countries is typically much higher than income inequality. It has followed a rising trend across countries since around 1980, similar to income inequality. Higher wealth inequality feeds higher future income inequality through capital income and inheritance.

The increase in inequality has been especially marked at the top end of the income distribution, with the income share of the top 10 percent (and even more so that of the top 1 percent) rising sharply in many countries. This was so particularly up to the global financial crisis of 2008-09. Those in low- and middle-income groups have suffered a loss of income share, with those in the bottom 50 percent typically experiencing larger losses of income share. These trends in inequality have been associated with an erosion of the middle class and a decline in intergenerational mobility , especially in advanced economies experiencing larger increases in inequality and a greater polarization in income distribution.

While within-country inequality has been rising, inequality between countries (reflecting per capita income differences) has been falling in recent decades. Faster-growing emerging economies, especially the large ones such as China and India, have been narrowing the income gap with advanced economies. Global inequality—the sum of within-country and between-country inequality—has declined somewhat since around 2000, with the fall in between-country inequality more than offsetting the rise in within-country inequality. As within-country inequality has been rising, it now accounts for a much larger part of global inequality (about two-thirds in 2020, up from less than half in 1980). Looking ahead, how within-country inequality evolves will matter even more for global inequality.

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The interplay between the evolution of within-country inequality and between-country inequality, coupled with the differential growth performance of emerging and advanced economies, in recent decades presents an interesting picture of middle-class dynamics at the global level (as depicted by the well-known “ elephant curve ” of the incidence of global economic growth). It shows, for the period since 1980, a rising middle class in the emerging world and a squeezed middle class in rich countries. It also shows an increasing concentration of income at the very top of the income distribution globally.

Drivers of rising inequality

Shifting economic paradigms are altering distributional dynamics. Transformative technological change, led by digital technologies, has been reshaping markets, business models, and the nature of work in ways that can increase inequality within economies. While the specifics differ across countries, this has been happening broadly through three channels: more unequal distribution of labor income with rising wage inequality as technology shifts labor demand from routine low- to middle-level skills to new, higher-level skills; shift of income from labor to capital with increasing automation and a decoupling of wages from firm profitability; and more unequal distribution of capital income with rising market power and economic rents enjoyed by dominant firms in increasingly concentrated and winner-takes-all markets. These dynamics are more evident in advanced economies but could increasingly impact developing economies as the new technologies favoring capital and higher-level skills make deeper inroads there.

Globalization (international trade, offshoring) also has contributed to rising inequality within economies, especially in advanced economies by negatively affecting wages and jobs of lower-skilled workers in tradable sectors. These sectors increasingly extend beyond manufacturing as digital globalization expands the range of activities, including services, deliverable across borders.

In emerging economies, technology is reshaping how international trade affects national inequality. The new technologies, born in advanced economies, are shifting manufacturing and global value chains toward higher capital and skill intensity. Leading manufacturing firms located in emerging economies and engaged in exporting are adopting these technologies in order to be able to compete, diminishing employment generation and wage growth prospects for less-skilled workers from this higher-productivity segment of industry in economies whose factor endowments would warrant less capital- and skill-intensive technologies—and thus limiting the potential of international trade to reduce inequality within these economies by boosting demand for their more abundant factor endowment (less-skilled workers). Meanwhile, smaller firms that absorb most such workers in these economies remain engaged in low-productivity activities, many in the informal economy and in petty service sectors.

Globalization has been a force in recent decades for reducing inequality between economies by expanding export opportunities for emerging economies and spurring their economic growth. But globalization’s role in promoting international economic convergence faces new challenges as technological change alters production processes and trade patterns (more on this below).

Other broad trends in recent decades affecting the distribution of income and wealth include changes in institutional settings such as economic deregulation, increasing financialization of economies coupled with a high concentration of financial income and wealth, and erosion of labor market institutions such as minimum wage laws and collective bargaining. Moreover, the redistributive role of the state has been weakening with declining tax progressivity and with transfer programs facing the pressure of tighter fiscal constraints.

Role of public policy

Large and persistent increases in inequality within economies are not an inevitable consequence of forces such as technological change and globalization. Much depends on how public policy responds to the new dynamics that these forces generate. In the midst of these common forces of change, the rise in inequality has been uneven across countries. The difference lies largely in countries’ institutional and policy settings and how they have responded. In general, looking across countries, public policy has been behind the curve. It has been slow to rise to the new challenges to promote more inclusive outcomes from economic change.

Public policy to reduce inequality is often viewed narrowly in terms of redistribution―taxes and transfers. This is indeed an important element, especially in view of the erosion of the state’s redistributive role in recent decades. But there is a much broader policy agenda of “predistribution” that can make the growth process itself more inclusive and produce better market outcomes—by promoting wider access to new opportunities for firms and workers and enhancing their capabilities to adjust as market dynamics shift.

This latter agenda of reforms spans competition policy and regulatory frameworks to keep markets competitive and inclusive in the digital age; innovation ecosystems and technology policies to put innovation to work for broader groups of people; digital infrastructure and literacy to reduce the digital divide; education and (re)training programs to upskill and reskill workers while addressing inequalities in access to these programs; and labor market policies and social protection systems to enable workers to obtain a fair share of economic returns and to support them in times of transition. In many of these reform areas, the new dynamics that economies are facing call for fresh thinking and significant policy overhaul.

Outlook for inequality

Absent more responsive policies to combat inequality, the current high levels of inequality are likely to persist or even rise further. Artificial intelligence and related new waves of digital technologies and automation could increase inequality further within countries. Even as new technologies increase productivity and produce greater economic affluence, and new jobs and tasks emerge to replace those displaced and so prevent large technological unemployment, inequality could reach much higher levels. The economic fallout of the COVID-19 pandemic has reinforced some of the inequality-increasing dynamics. Also, a high and increasing concentration of wealth can exacerbate income inequality in a mutually reinforcing cycle.

Technological change also poses new challenges to global economic convergence that has reduced inequality between countries in the past couple of decades. Faster growth in emerging economies led by export of manufactures has depended greatly on their comparative advantage in labor-intensive manufacturing based on large populations of low-skill, low-wage workers. This source of comparative advantage increasingly will erode as automation of low-skill work expands. Emerging economies face the challenge of recalibrating their growth models as technology disrupts traditional pathways to growth and development.

Emerging economies’ growth prospects also face other headwinds, including the scarring effects of the pandemic and global supply chain disruptions exacerbated by the war in Ukraine and an unsettled global geopolitical environment, which would hit the more trade-dependent economies harder. If growth in emerging economies falters, the decline in between-country inequality will slow, which could stall or even reverse the modest decline in global inequality observed since about 2000 if within-country inequality continues to mount.

Climate change is another factor that could worsen inequality within and between countries. Low-income groups and countries are more vulnerable to the impacts of climate change and have less capacity to cope with them.

Income and wealth inequality is elevated. In the absence of policies to counter recent trends, inequality could rise to still higher levels. High and rising inequality entails adverse economic, social, and political consequences. Policymakers must pay more attention to the changing distributional dynamics in the digital age and harness the forces of change for more inclusive prosperity. History tells us that large and unabated rises in inequality can end up badly.

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Rising inequality affecting more than two-thirds of the globe, but it’s not inevitable: new UN report

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Inequality is growing for more than 70 per cent of the global population, exacerbating the risks of divisions and hampering economic and social development. But the rise is far from inevitable and can be tackled at a national and international level, says a flagship study released by the UN on Tuesday.

The World Social Report 2020, published by the UN Department of Economic and Social Affairs (DESA), shows that income inequality has increased in most developed countries, and some middle-income countries - including China, which has the world’s fastest growing economy.

The challenges are underscored by UN chief António Guterres in the foreword, in which he states that the world is confronting “the harsh realities of a deeply unequal global landscape”, in which economic woes, inequalities and job insecurity have led to mass protests in both developed and developing countries.

 “Income disparities and a lack of opportunities”, he writes, “are creating a vicious cycle of inequality, frustration and discontent across generations.”

‘The one per cent’ winners take (almost) all

The study shows that the richest one per cent of the population are the big winners in the changing global economy, increasing their share of income between 1990 and 2015, while at the other end of the scale, the bottom 40 per cent earned less than a quarter of income in all countries surveyed.

One of the consequences of inequality within societies, notes the report, is slower economic growth. In unequal societies, with wide disparities in areas such as health care and education, people are more likely to remain trapped in poverty, across several generations.

Between countries, the difference in average incomes is reducing, with China and other Asian nations driving growth in the global economy. Nevertheless, there are still stark differences between the richest and poorest countries and regions: the average income in North America, for example, is 16 times higher than that of people in Sub-Saharan Africa.

Four global forces affecting inequality

The report looks at the impact that four powerful global forces, or megatrends, are having on inequality around the world: technological innovation, climate change, urbanization and international migration.

Whilst technological innovation can support economic growth, offering new possibilities in fields such as health care, education, communication and productivity, there is also evidence to show that it can lead to increased wage inequality, and displace workers.

Rapid advances in areas such as biology and genetics, as well as robotics and artificial intelligence, are transforming societies at pace. New technology has the potential to eliminate entire categories of jobs but, equally, may generate entirely new jobs and innovations.

For now, however, highly skilled workers are reaping the benefits of the so-called “fourth industrial revolution”, whilst low-skilled and middle-skilled workers engaged in routine manual and cognitive tasks, are seeing their opportunities shrink.

Opportunities in a crisis

As the UN’s 2020 report on the global economy showed last Thursday, the climate crisis is having a negative impact on quality of life, and vulnerable populations are bearing the brunt of environmental degradation and extreme weather events. Climate change, according to the World Social Report, is making the world’s poorest countries even poorer, and could reverse progress made in reducing inequality among countries.

If action to tackle the climate crisis progresses as hoped, there will be job losses in carbon-intensive sectors, such as the coal industry, but the “greening” of the global economy could result in overall net employment gains, with the creation of many new jobs worldwide.

For the first time in history, more people live in urban than rural areas, a trend that is expected to continue over the coming years. Although cities drive economic growth, they are more unequal than rural areas, with the extremely wealthy living alongside the very poor.

The scale of inequality varies widely from city to city, even within a single country: as they grow and develop, some cities have become more unequal whilst, in others, inequality has declined.

Migration a ‘powerful symbol of global inequality’

The fourth megatrend, international migration, is described as both a “powerful symbol of global inequality”, and “a force for equality under the right conditions”.

Migration within countries, notes the report, tends to increase once countries begin to develop and industrialize, and more inhabitants of middle-income countries than low-income countries migrate abroad.

International migration is seen, generally, as benefiting both migrants, their countries of origin (as money is sent home) and their host countries.

In some cases, where migrants compete for low-skilled work, wages may be pushed down, increasing inequality but, if they offer skills that are in short supply, or take on work that others are not willing to do, they can have a positive effect on unemployment.

Harness the megatrends for a better world

Despite a clear widening of the gap between the haves and have-nots worldwide, the report points out that this situation can be reversed. Although the megatrends have the potential to continue divisions in society, they can also, as the Secretary-General says in his foreword, “be harnessed for a more equitable and sustainable world”. Both national governments and international organizations have a role to play in levelling the playing field and creating a fairer world for all.

Reducing inequality should, says the report, play a central role in policy-making. This means ensuring that the potential of new technology is used to reduce poverty and create jobs; that vulnerable people grow more resilient to the effects of climate change; cities are more inclusive; and migration takes place in a safe, orderly and regular manner.

Three strategies for making countries more egalitarian are suggested in the report: the promotion of equal access to opportunities (through, for example, universal access to education); fiscal policies that include measures for social policies, such as unemployment and disability benefits; and legislation that tackles prejudice and discrimination, whilst promoting greater participation of disadvantaged groups.

While action at a national level is crucial, the report declares that “concerted, coordinated and multilateral action” is needed to tackle major challenges affecting inequality within and among countries.

The report’s authors conclude that, given the importance of international cooperation, multilateral institutions such as the UN should be strengthened and action to create a fairer world must be urgently accelerated.

The UN’s 2030 Agenda for Sustainable Development , which provides the blueprint for a better future for people and the planet, recognizes that major challenges require internationally coordinated solutions, and contains concrete and specific targets to reduce inequality, based on income.

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• World Social Report 2020: Inequality In a Rapidly Changing World

World Social Report 2020: Inequality in a Rapidly Changing World

• World Social Report 2020

Growing inequality in both developing and developed countries could exacerbate divisions and slow economic and social development according to a new UN report, the World Social Report 2020, that was launched today. More than two thirds of the world’s population today live in countries where inequality has grown, and inequality is rising again even in some of the countries that have seen inequality decline in recent decades, such as Brazil, Argentina and Mexico.

The impacts of inequality are being felt at the personal and national levels. According to the report, which is produced by the UN Department of Economic and Social Affairs, highly unequal societies are less effective at reducing poverty, grow more slowly, make it more difficult for people to break out of the cycle of poverty, and close the door to economic and social advancement.

UN Secretary-General António Guterres, writing in the foreword, said, “’The World Social Report 2020: Inequality in a rapidly changing world’ comes as we confront the harsh realities of a deeply unequal global landscape. In North and South alike, mass protests have flared up, fueled by a combination of economic woes, growing inequalities and job insecurity. Income disparities and a lack of opportunities are creating a vicious cycle of inequality, frustration and discontent across generations.”

The report provides evidence showing that technological innovation, climate change, urbanization and international migration are affecting inequality trends. The Secretary-General added, “The World Social Report 2020 sends a clear message: the future course of these complex challenges is not irreversible. Technological change, migration, urbanization and even the climate crisis can be harnessed for a more equitable and sustainable world, or they can be left to further divide us.”

The Sustainable Development Goals, unanimously adopted by countries in 2015, contains a specific goal aimed at reducing inequality. Embodied in the Goals is the principle to “leave no one behind”. The Report found that the extraordinary economic growth over the last several decades has failed to close the “deep divides within and across countries.”

These disparities between and within countries, the report says, will inevitably drive people to migrate. The report notes that, if it is well managed, migration will not only benefit migrants, but it can also help reduce poverty and inequality.

With increases in migration from rural areas, more than half of the world population now lives in urban areas. While cities can drive innovation and boost prosperity, many urban dwellers suffer from extreme inequality. In a world with high and growing levels of urbanization, the future of inequality largely depends on what happens in cities and the advantages that cities bring may not be sustained if high urban inequalities are not reduced.

Inequality erodes trust in government

The report found that inequalities concentrate political influence among those who are already better off, which tends to preserve or even widen opportunity gaps. “Growing political influence among the more fortunate erodes trust in the ability of Governments to address the needs of the majority.”

Even in countries that have fully recovered from the 2008 financial and economic crisis, popular discontent remains high.

The growing inequalities are benefitting the wealthiest. Top income tax rates have declined in both developed and developing countries, making tax systems less progressive. In developed countries, the top income tax rates fell from 66 percent in 1981 to 43 percent in 2018.

And in developing countries, children in the poorest households—and those from the most disadvantaged ethnic groups—have experienced slower progress in secondary school attendance than those from wealthier families, who are increasingly sending their children to better quality schools. Disparities and disadvantages in health and education are being transmitted from one generation to the next.

Climate change exacerbating inequalities

Emissions are increasing, global temperatures are rising, but the impacts of climate change are not being felt uniformly around the world, with the countries in the tropics being among the most adversely affected. According to the report, climate change has made the world’s poorest countries poorer, and if left unaddressed, it could cause millions of people to fall into poverty during the next ten years. Climate change is also making things worse for the next generation, with the impacts likely to reduce job opportunities, especially in the hardest hit countries.

The report warns that, just as climate change can increase inequality, so can the policies designed to counter its effects. As countries take climate action, it will be important to protect low-income households.

Technology creating winners and losers

The rapid and revolutionary technological breakthroughs in recent decades have been a boon to skilled workers and workers who can upgrade their skills. But it has also taken a toll on low-skilled and medium-skilled workers in routine-intensive labor, whose jobs are increasingly being phased out or lost as technologies are being captured by a small number of dominant companies.

While new technologies such as digital innovation and artificial intelligence open up vast new opportunities for employment and engagement, the Report found that their potential to promote sustainable development can only be realized if everyone has access to them, which is not happening, creating new “digital divides.” About 87 per cent of people in developed countries have internet access, compared to 19 per cent in developing countries.

Technological advances can exacerbate inequalities, by giving an edge to those with early access to those technologies and can widen gaps in education if they disproportionately help the children of the wealthiest.

The report, using positive examples, presents concrete policy recommendations that can promote access to opportunity, allow macroeconomic policy to focus on reducing inequality, and tackle prejudice and discrimination.

Issued as the United Nations prepares to celebrate its 75th anniversary, the report provides the analysis and policy recommendations to frame the global conversation on reducing inequality as a key condition for building the future we want.

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Chapter 9. Social Inequality

9.1. What Is Social Inequality?

Sociologists use the term social inequality to describe the unequal distribution of valued resources, rewards, and social positions in a society. Key to the concept are the notions of social differentiation and social stratification . The question for sociologists is: how are systems of stratification formed? What is the basis of systematic social inequality in society?

Social differentiation refers to the social characteristics — social differences, identities, and roles — used to differentiate people and divide them into different categories, such as race, gender, age, class, occupation, and education. These social categories have implications for social inequality. Social differentiation by itself does not necessarily imply a division of individuals into a hierarchy of rank, privilege, and power. However, when a social category like class, occupation, gender, or race puts people in a position where they can claim a greater share of resources or rewards, then social differentiation becomes the basis of social inequality.

The term social stratification refers to an institutionalized system of social inequality. It refers to a situation in which social inequality has solidified into an ongoing system that determines and reinforces who gets what, when, and why. Social differentiation based on different characteristics becomes the basis for social inequality.

Students may remember the word “stratification” from geology class. The distinct horizontal layers found in rock, called “strata,” are a good way to visualize social structure. Society’s layers are made of people, and society’s resources are distributed unevenly throughout the layers. The people with the most resources represent the top layer of the social structure of stratification. Other groups of people, with progressively fewer and fewer resources, represent the lower layers of society. Social stratification assigns people to socio-economic strata based on a process of social differentiation — “these type of people go here, and those type of people go there.” The outcome is differences in wealth, income and power. Again, the question for sociologists is how systems of stratification are formed. What is the basis of systematic social inequality in society?

Equality of Condition and Equality of Opportunity

In Canada, the dominant ideological presumption about social inequality is that everyone has an equal chance at success. This is the belief in equality of opportunity , which can be contrasted with the concept of equality of condition . Equality of opportunity is the idea that everyone has an equal possibility of becoming successful. It exists when people have the same chance to pursue economic or social rewards. This is often seen as a function of equal access to education, meritocracy (where individual merit determines social standing), and formal or informal measures to eliminate social discrimination.

Equality of condition is the situation in which everyone in a society has a similar actual level of wealth, status, and power. Although degrees of equality of condition vary markedly in modern societies, it is clear that even the most egalitarian societies today have considerable degrees of inequality of condition. Ultimately, equality of opportunity means that inequalities of condition are not so great that they greatly hamper a person’s opportunities or life chances. Whether Canada is a society characterized by equality of opportunity, or not, is a subject of considerable sociological debate.

To a certain extent, Ted Rogers’ story illustrates the idea of equality of opportunity. His personal narrative is one in which hard work and talent — not inherent privilege, birthright, prejudicial treatment, or societal values — determined his social rank. This emphasis on individual effort is based on the belief that people individually control where they end up in the social hierarchy, which is a key piece in the idea of equality of opportunity. Most people connect inequalities of wealth, status, and power to the individual characteristics of those who succeed or fail. The story of the Aboriginal gang members, although it is also a story of personal choices, casts that belief into doubt. It is clear that the type of choices available to the Aboriginal gang members are of a different range and quality than those available to the Rogers family. The available choices and opportunities are a product of habitus and location within the system of social stratification .

While there are always inequalities between individuals in terms of talent, skill, drive, chance, and so on, sociologists are interested in larger social patterns. Social inequality is not about individual qualities and differences, but about systematic inequalities based on group membership, class, gender, ethnicity, and other variables that structure access to rewards and status. In other words, sociologists are interested in examining the structural conditions of social inequality. There are of course differences in individuals’ abilities and talents that will affect their life chances. The larger question, however, is how inequality becomes systematically structured in economic, social, and political life. In terms of individual ability: Who gets the opportunities to develop their abilities and talents, and who does not? Where does “ability” or “talent” come from? As Canadians live in a society that emphasizes the individual (individual effort, individual morality, individual choice, individual responsibility, individual talent, etc.) it is often difficult to see the way in which life chances are socially structured.

Wealth, Income, Power and Status

Factors that define the layers of stratification vary in different societies. In most modern societies, stratification is indicated by differences in wealth , the net value of money and assets a person has, and income , a person’s wages, salary, or investment dividends. It can also be defined by differences in power (e.g., how many people a person must take orders from versus how many people a person can give orders to, or how many people are affected by one’s orders) and status (the degree of honour or prestige one has in the eyes of others). These four factors create a complex amalgam that defines an individual’s social standing within a hierarchy.

Usually the four factors coincide, as in the case of corporate CEOs, like Ted Rogers, at the top of the hierarchy — wealthy, powerful, and prestigious — and the Aboriginal offenders at the bottom — poor, powerless, and abject. Sociologists use the term status consistency to describe the consistency of an individual’s rank across these factors.

Students can also think of someone like the Canadian Prime Minister — who ranks high in power, but with a salary of approximately $320,000 — earns much less than comparable executives in the private sector (albeit eight times the average Canadian salary). The Prime Minister’s status or prestige also rises and falls with the fluctuations of politics and public opinion. The Nam-Boyd scale of status, based on education and income, ranks politicians (legislators) at 66/100, the same status as cable TV technicians (Boyd, 2008). There is status inconsistency in the prime minister’s position.

Teachers often have high levels of education, which give them high status (92/100 according to the Nam-Boyd scale), but they receive relatively low pay. Many believe that teaching is a noble profession, so teachers should do their jobs for the love of their profession and the good of their students, not for money. Yet no successful executive or entrepreneur would embrace that attitude in the business world, where profits are valued as a driving force. Cultural attitudes and beliefs like these support and perpetuate social inequalities.

Systems of Stratification

Sociologists distinguish between two types of stratification systems. Closed systems accommodate little change in social position. They do not allow people to shift levels and do not permit social relations between levels. Open systems, which are based on achievement, allow movement and interaction between layers and classes. The different systems also produce and foster different cultural values, like the values of loyalty and traditions versus the values of innovation and individualism. The difference in stratification systems can be examined by the comparison between class systems and caste systems.

The Caste System

Caste systems are closed stratification systems in which people can do little or nothing to change their social standing. A caste system is one in which people are born into their social standing and remain in it their whole lives. It is based on fixed or rigid status distinctions, rather than economic classes per se.

As noted above, status is defined by the level of honour or prestige one receives by virtue of membership in a group. Sociologists make a distinction between ascribed status: a status one receives by virtue of being born into a category or group (e.g., caste, hereditary position, gender, race, ethnicity, etc.), and achieved status:   a status one receives through individual effort or merits (e.g., occupation, educational level, moral character, etc.). Caste systems are based on a hierarchy of ascribed statuses, because people are born into fixed caste groups. A person’s occupation and opportunity for education follow from their caste position.

In a caste system, people are assigned roles regardless of their individual talents, interests, or potential. Marriage is endogamous (from endo- ‘within’ and  Greek gamos ‘marriage’) which means marriage between castes is forbidden, whereas exogamous marriage is a marriage union between people from different social groups. There are virtually no opportunities to improve one’s social position. Instead, the relationship between castes is bound by institutionalized rules, and highly ritualistic procedures come into play when people from different castes come into contact. People value traditions and often devote considerable time to perfecting the details of ritualistic procedures.

The feudal systems of Europe and Japan can, in some ways, be seen as caste systems in that the statuses of positions in the social stratification systems were fixed, and there was little or no opportunity for movement through marriage or economic opportunities. In Europe, the feudal estate system divided the population into clergy (first estate), nobility (second estate), and commoners (third estate), which included artisans, merchants, and peasants. In early European feudalism, it was still possible for a peasant or a warrior to achieve a high position in the clergy or nobility, but later the divisions became more rigid. In Japan, between 1603 and 1867, the mibunsei system divided society into five rigid strata in which social standing was inherited. At the top was the Emperor, then court nobles ( kuge ), military commander-in-chief ( shogun ), and land-owning lords ( daimyo ). Beneath them were four classes or castes: the military nobility ( samurai ), peasants, craftsmen, and merchants. The merchants were considered the lowest class because they did not produce anything with their own hands. There was also an outcast or untouchable caste known as the burakumin, who were considered impure or defiled because of their association with death: executioners, undertakers, slaughterhouse workers, tanners, and butchers (Kerbo, 2006).

The caste system in India from 4,000 years ago until the 20th century probably best typifies the system of stratification. In the Hindu caste tradition, people were expected to work in the occupation of their caste and enter into marriage according to their caste. Originally there were four castes: Brahmans (priests), Kshatriyas (military), Vaisyas (merchants), and Sudras (artisans, farmers). There were also the Dalits or Harijans (“untouchables”). Hindu scripture said, “In order to preserve the universe, Brahma (the Supreme) caused the Brahmin to proceed from his mouth, the Kshatriya to proceed from his arm, the Vaishya to proceed from his thigh, and the Shudra to proceed from his foot” (Kashmeri, 1990).

Accepting this social standing was considered a moral duty. Cultural values and economic restrictions reinforced the system. Caste systems promote beliefs in fate, destiny, and the will of a higher power, rather than promoting individual freedom as a value. A person who lives in a caste society is socialized to accept their social standing, and this is reinforced by the society’s dominant norms and values.

Although the caste system in India has been officially dismantled, its residual presence in Indian society is deeply embedded. In rural areas, aspects of the tradition are more likely to remain, while urban centres show less evidence of this past. In India’s larger cities, people now have opportunities to choose their own career paths and marriage partners. As a global centre of employment, corporations have introduced merit-based hiring and employment to the nation. The caste system has been largely replaced by a class system of structured inequality. Nevertheless, Dalits continue to experience violence and discrimination in hiring or obtaining business loans (Jodhka, 2018).

The Class System

A class system is based on both socio-economic factors and individual achievement. It is at least a partially open system. A class consists of a set of people who have the same relationship to the means of production or productive property — that is, to the things used to produce the goods and services needed for survival, such as tools, technologies, resources, land, workplaces, etc. In Karl Marx’s (1848) analysis, class systems form around the institution of private property, dividing those who own or control productive property from those who do not, who survive on the basis of selling their labour. In capitalist societies, for example, the dominant classes are the capitalist class and the working class.

In a class system, social inequality is structural , meaning it is built into the organization of the economy. The relationship to the means of production (i.e., ownership/non-ownership) defines a persistent, objective pattern of social relationships that exists independently of individuals’ personal or voluntary choices and motives.

Unlike caste systems, however, class systems are open in the sense that individuals are able to change class position. Individuals are at least formally free to gain a different level of education or occupation than their parents. They can move up and down within the stratification system. They can also socialize with and marry members of other classes, allowing people to move from one class to another. In other words, individuals can move up and down the class hierarchy, even while the class categories and the class hierarchy itself remain relatively stable. It is not impossible for individuals to pass back and forth between classes through social mobility , but the class structure itself remains intact, structuring people’s lives, privileges, wealth, and social possibilities.

In a class system, one’s occupation is not fixed at birth. Though family background tends to predict where one ends up in the stratification system, personal factors play a role. For example, Ted Rogers Jr. chose a career in media like his father but managed to move upward from a position of modest wealth and privilege in the petite bourgeoisie, to being the fifth-wealthiest bourgeois in the country. On the other hand, his father Ted Sr. chose a career in radio based on individual interests that differed from his own father’s. Ted Sr.’s father, Albert Rogers, held a position as a director of Imperial Oil. Ted Sr. therefore moved downward from the class of the bourgeoisie to the class of the petite bourgeoisie.

Making Connections: Case Study

The commoner who could be queen.

On April 29, 2011, in London, England, Prince William, Duke of Cambridge, married Catherine (“Kate”) Middleton, a commoner. Throughout its history, it has been rare, though not unheard of, for a member of the British royal family to marry a commoner. Kate Middleton had an upper-middle-class upbringing. Her father was a former flight dispatcher, and her mother was a former flight attendant. The family then formed a lucrative mail order business for party accessories. William was the elder son of Charles, Prince of Wales, and Diana, Princess of Wales. Kate and William met when they were both students at the University of St. Andrews in Scotland (Köhler, 2010).

The rules regarding the marriage of royals trace their history to Britain’s formal feudal monarchy, which arose with William of Normandy’s conquest in 1066. Feudal social hierarchy was originally based on landholding. The monarch’s family (royalty) was at the top, vassals, nobles and knights (landholders) below the king, and commoners or serfs on the bottom. This was generally a closed system, with people born into positions of nobility or serfdom. Wealth was passed from generation to generation through primogeniture , a law stating that all property was to be inherited by the firstborn son. If the family had no son, the land went to the next closest male relation. Women could not inherit property, and their social standing was primarily determined through marriage. From the late feudal era onward, a royal marrying a commoner was a scandal. In 1937, the British parliament obliged Edward VIII to abdicate his succession to King of the United Kingdom, so he could marry the American divorcée, Wallis Simpson. Not only was she a commoner, but she was also divorced , which contradicted the Church of England doctrine.

The rise of capitalism changed Britain’s class structure. The feudal commoner class generated both the new dominant class of the bourgeoisie or capitalists and the new subordinate class of the proletariat or wage labourers. The aristocracy and the royals continued as a class through their wealth and property, but their position in society became increasingly based on status and tradition alone. Today, the British government is a constitutional monarchy, with the prime minister and other ministers elected to their positions.  The royal family’s role is largely ceremonial. The historical differences between nobility and commoners have blurred, and the modern class system in Britain is similar to Canada. Since Edward VIII’s abdication in 1937, Queen Elizabeth II’s sister and several of her children and grandchildren have married commoners.

Today, the royal family still commands wealth, power, and a great deal of attention. In 2017, Forbes estimated the total wealth of the royal family to be $88 billion (Rodriguez, 2017). Since Queen Elizabeth II passed away in September 2022, Prince Charles has ascended the throne as king. His wife Camille Parker-Bowles, also a commoner and divorcée, is expected to become “Princess Consort.” If Charles had abdicated (chosen not to become king) or died, the position would go to Prince William. If that happened, Kate Middleton would be called Queen Catherine and hold the position of Queen Consort. She would be one of the few queens in history to have earned a university degree (Marquand, 2011). Of note here is, of course, Prince Harry, who married the commoner and divorcée Meghan Markle. Prince Harry is currently 6th in line for the British throne, after Prince William’s children. If she succeeded to Queen Consort, Meghan Markle would be the first queen with African heritage.

Initially there was a great deal of social pressure on Kate Middleton not only to behave as a royal, but to bear children. The royal family recently changed its succession laws to allow daughters, not just sons, to ascend the throne. Her firstborn son, Prince George, was born on July 22, 2013, so the new succession law is not likely to be tested in the near future. However, behind George is Princess Charlotte (b. 2015) and Prince Louis (b. 2018). Kate’s experience — from commoner to possible queen — demonstrates the fluidity of social class position in modern society.

Social Class

Social class is both obvious and not so obvious in Canadian society. It is based on subjective impressions, outward symbols, and less visible structural determinants. Can one tell a person’s education level based on clothing? Is opening an $80 bottle of wine for dinner normal, an exceptional occasion, or an insane waste of money? Can one guess a person’s income by the car they drive? There was a time in Canada when people’s class was more visibly apparent. In some countries, like the United Kingdom, class differences can still be gauged by differences in schooling, lifestyle, and even accent. In Canada, however, it is harder to determine class from outward appearances.

For sociologists, too, categorizing class is a fluid science. One debate in the discipline is between Marxist and Weberian approaches to social class (Abercrombie & Urry, 1983).

Marx’s analysis emphasizes a historical materialist approach to the underlying structures of the capitalist economy. Classes are historical formations that distribute people into categories based on the organization and structure of the economy. Marx’s definition of social class rests essentially on one materialist variable: a group’s relation to the means of production (ownership or non-ownership of productive property or capital). Therefore, in Marxist class analysis, there are two dominant classes in capitalism — the working class and the owning class — and any divisions within the classes based on occupation, status, education, etc. are less important than the tendency toward increasing separation and polarization of these two classes.

Marx referred to these two classes as the bourgeoisie and the proletariat . The capitalist class (bourgeoisie) lives from the proceeds of owning or controlling productive property (capital assets like factories, technology, software platforms or machinery, or capital itself in the form of investments, stocks, and bonds).  The working class (proletariat) live from selling their labour to the capitalists for a wage or salary.  Their interests are in conflict, as higher profits depend on lower wages, which accounts for the characteristic power dynamics, conflicts, instabilities and periodic crises of capitalist societies.

In addition, he described the classes of the petite bourgeoisie (the little bourgeoisie) and the lumpenproletariat (the sub-proletariat). The petite bourgeoisie are those like small business owners, farmers, and contractors who own some property and perhaps employ a few workers, but still rely on their own labour to survive. The lumpenproletariat are the chronically unemployed or irregularly employed, who are in and out of the workforce. They are what Marx referred to as the “reserve army of labour,” a pool of potential labourers who are surplus to the needs of production at any particular time.

Weber defined social class slightly differently, as the life chances one shares in common with others by virtue of possession of property, goods, skills or opportunities for income (1969). Life chances refer to the ability or probability of an individual to act on opportunities and attain a certain standard of living. Owning property or capital, or not owning property or capital, is still the basic variable that defines a person’s class situation or life chances. However, class position is defined with respect to markets rather than the process of production . It is the value of one’s capital, products or skills in the commodity or labour markets at any particular time that determines whether one has greater or fewer life chances.

This yields a model of class hierarchy based on multiple gradations of socio-economic status, instead of a division between two principle classes. Analyses of class inspired by Weber tend to emphasize gradations of status relating to several variables like wealth, income, education, and occupation. Class stratification is not just determined by a group’s economic position, but by the prestige of the group’s occupation, education level, consumption, and lifestyle. It is a matter of status — the level of honour or prestige one holds in the community by virtue of one’s social position — as much as a matter of class.

Based on the Weberian approach, some sociologists talk about upper, middle, and lower classes (with many subcategories within them) in a way that mixes status categories with class categories. These gradations are often referred to as a group’s socio-economic status ( SES ): their social position relative to others based on income, education, and prestige of occupation . For example, although plumbers might earn more than high school teachers and have greater “life chances” in a particular economy, the status division between blue-collar work (people who “work with their hands”) and white-collar work (people who “work with their minds”) means the plumbers might be characterized as lower class but teachers as middle class.

There is a randomness in the division of classes into upper, middle, and lower in the Weberian model. However, this manner of classification based on status distinctions captures something about the subjective experience of class and the shared lifestyle and consumption patterns of class that Marx’s categories often do not. An NHL hockey player receiving a salary of $6 million a year is a member of the working class, strictly speaking. He might even go on strike or get locked out according to the dynamic of capital and labour conflict described by Marx. Nevertheless, it is difficult to see what the life chances of the hockey player have in common with a landscaper or receptionist, despite the fact that they might share a common working-class background.

Class: Materialist and Interpretive Factors

Social class is a complex category to analyze. It has both a strictly materialist quality relating to a group’s structural position within the economic system, and an interpretive quality relating to the formation of status gradations, common subjective perceptions of class, differences of power in society, and class-based lifestyles and consumption patterns. Considering both the Marxist and Weberian models, social class has at least three objective components: a group’s position in the occupational structure (i.e., the status and salary of one’s job), a group’s position in the power structure (i.e., who has authority over whom), and a group’s position in the property structure (i.e., ownership or non-ownership of capital). It also has an important subjective component that relates to recognitions of status, distinctions of lifestyle, and ultimately how people perceive their place in the class hierarchy.

Making Connections: Classic Sociologists

Marx and weber on social class: how do they differ.

Often, Marx and Weber are perceived as at odds in their approaches to class and social inequality, but it is perhaps better to see them as articulating different styles of analysis.

Weber’s analysis presents a more complex model of the social hierarchy of capitalist society than Marx. Weber’s model goes beyond the economic structural class position to include the variables of status (degree of social prestige or honour) and power (degree of political influence). Thus, Weber provides a multi-dimensional model of social hierarchy. As a result, although individuals might be from the same objective class, their position in the social hierarchy might differ according to their status and political influence. For example, women and men might be equal in terms of their class position, but because of the inequality in the status of the genders within each class, women (as a group) remain lower in the social hierarchy.

With respect to class specifically, Weber also relies on a different definition than Marx. As noted above, Weber (1969) defines class as the “life chances” one shares in common with others by virtue of one’s possession of goods or opportunities for income. Class is defined with respect to markets, rather than the process of production. As in Marx’s analysis, the economic position that stems from owning property and capital, or not owning property and capital, is still the basic variable that defines one’s class situation or life chances. However, as the value of different types of capital or property (e.g., industrial, real estate, financial, etc.), or the value of different types of opportunity for income (i.e., different types of marketable skills), varies according to changes in the commodity or labour markets, Weber can provide a more nuanced description of an individual’s class position than Marx. A skilled tradesman like a pipe welder might enjoy a higher class position and greater life chances in Northern Alberta where such skills are in demand, than a high school teacher in Vancouver or Victoria where the number of qualified teachers exceeds the number of positions available. If one adds the element of status into the picture, the situation becomes even more complex, as the educational requirements and social responsibilities of the high school teacher usually confer more social prestige than the requirements and responsibilities of the pipe welder.

Nevertheless, Weber’s analysis is descriptive rather than analytical . It can provide a useful description of differences between the levels or “strata” in a social hierarchy or stratification system but does not provide an analysis of the formation of classes themselves.

On the other hand, Marx’s analysis of class is essentially one-dimensional. It has one variable: the relationship to the means of production. If one is a professional hockey player, a doctor in a hospital, or a clerk in a supermarket, one works for a wage and is therefore a member of the working class. In this regard, his analysis challenges common sense, as the difference between these different “fragments” of the working class seems paramount — at least from the point of view of the subjective experience of class. It would seem that hockey players, doctors, lawyers, professors, and business executives have very little in common with grocery clerks, factory or agricultural workers, tradespeople, or low level administrative staff, despite the fact that they all depend on being paid wages by someone.

However, the key point of Marx’s analysis is not to ignore the existence of status distinctions within classes, but to examine class structure dialectically in order to provide a more comprehensive and historical picture of class dynamics.

The four components of dialectical analysis were described in Chapter 1. An Introduction to Sociology : (1) Everything in society is related; (2) everything is caught up in a process of change; (3) change proceeds from the quantitative to the qualitative; and (4) change is the product of oppositions and struggles in society. These dialectical qualities are also central to Marx’s account of the hierarchical structure of classes in capitalist society.

With regard to the first point — everything in society is related — the main point of the dialectical analysis of class is that the working class and the owning class have to be understood in a structural relationship to one another. They emerged together out of the old class structure of feudalism. More significantly for Marx, each exists only because the other exists. The wages that define the wage labourer are paid by the capitalist; the profit and capital accumulated by the capitalist are products of the workers’ labour.

In Marx’s dialectical model, “everything is caught up in a process of change” occurs because the system is characterized by the struggle of opposites.  The classes are structurally in conflict because the contradiction in their class interests is built into the economic system. The bourgeoisie as a class is defined by the economic drive to accumulate capital and increase profit. The key means to achieve this in a competitive marketplace is by reducing the cost of production by lowering the cost of labour (by reducing wages, moving production to lower wage areas, or replacing workers with labour-saving technologies). This conflicts with the interests of the proletariat who seek to establish a sustainable standard of living by maintaining their level of wages and employment in society. While individual capitalists and individual workers might not see it this way, structurally, their class interests clash and define a persistent pattern of management-labour conflict and political cleavage in modern, capitalist societies.

So, from the dialectical model, Marx can predict that the composition of classes changes over time: the statuses of different occupations vary, the proportions between workers’ income and capitalists’ profit change, and the types of production and the means of production change (through the introduction of labour-saving technologies, globalization, new products and consumption patterns, etc.). In addition, change proceeds from the quantitative to the qualitative, in the sense that the multiplicity of changes in purely quantitative variables like salary, working conditions, unemployment levels, rates of profitability, product sales, supply and demand, etc., lead to changes in qualitative variables like the subjective experience of inequality and injustice, the political divisions of “left” and “right,” the formation of class-consciousness, and eventually change in the entire economic system through new models of capital accumulation or even revolution.

The strength of Marx’s analysis is its ability to go beyond a description of where different groups fit within the class structure at a given moment in time to an analysis of why those groups and their relative positions change with respect to one another. The dialectical approach reveals the underlying logic of class structure as a dynamic system, and the potential commonality of interests and subjective experiences that define class-consciousness. As a result, in an era in which the precariousness of many high status “middle class” jobs has become clearer, the divisions of economic and political interests between the different segments of the working class becomes less so.

Media Attributions

• Figure 9.3 Office Politics: A Rise to the Top by Alex Proimos, via Flickr, is used under a CC BY-NC 2.0 licence.
• Figure 9.4 Strata in the Badlands by Just a Prairie Boy, via Flickr, is used under a CC BY 2.0 licence.
• Figure 9.5 Fort Mason Neighborhood by Orin Zebest, via Flickr, is used under a CC BY 2.0 licence.
• Figure 9.6  Woman, construction, worker, temple, india, manual, poor, labourer, labour , via PxHere, is used under a CC0 Public Domain licence. 
• Figure 9.7 Royal wedding Kate & William by Gerard Stolk, via Flickr, is used under a CC BY-NC 2.0  licence. 
• Figure 9.8 Item B-03624 – Group of Nanaimo coal miners at the pithead by unknown photographer, [ca. 1870]  (Creation) via the Royal BC Museum/ British Columbia Archives Collection (Item B-03624), is in the public domain .
• Figure 9.9 James and Laura Dunsmuir in Italian Garden at Hatley Park, by unknown photographer, 1912-1920  (Creation), courtesy of Craigdarroch Castle Society,  is in the public domain .
• Figure 9.10 File:MAX WEBER.jpg  by Power Renegadas, via Wikimedia Commons, is used under a CC BY-SA 4.0 licence.
• Figure 9.11   Karl Marx by John Mayall, via Wikimedia Commons, is in the public domain .

Introduction to Sociology – 3rd Canadian Edition Copyright © 2023 by William Little is licensed under a Creative Commons Attribution 4.0 International License , except where otherwise noted.

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The Sociology of Social Inequality

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Social inequality results from a society organized by hierarchies of class, race, and gender that unequally distributes access to resources and rights.

It can manifest in a variety of ways, like income and wealth inequality, unequal access to education and cultural resources, and differential treatment by the police and judicial system, among others. Social inequality goes hand in hand with social stratification .

Social Inequality Overview

Social inequality is characterized by the existence of unequal opportunities and rewards for different social positions or statuses within a group or society. It contains structured and recurrent patterns of unequal distributions of goods, wealth, opportunities, rewards, and punishments.

Racism , for example, is understood to be a phenomenon whereby access to rights and resources is unfairly distributed across racial lines. In the context of the United States, people of color typically experience racism, which benefits white people by conferring on them white privilege , which allows them greater access to rights and resources than other Americans.

There are two main ways to measure social inequality:

• Inequality of conditions
• Inequality of opportunities

Inequality of conditions refers to the unequal distribution of income, wealth, and material goods. Housing, for example, is inequality of conditions with the homeless and those living in housing projects sitting at the bottom of the hierarchy while those living in multi-million dollar mansions sit at the top.

Another example is at the level of whole communities, where some are poor, unstable, and plagued by violence, while others are invested in by businesses and government so that they thrive and provide safe, secure, and happy conditions for their inhabitants.

Inequality of opportunities refers to the unequal distribution of life chances across individuals. This is reflected in measures such as level of education, health status, and treatment by the criminal justice system.

For example, studies have shown that college and university professors are more likely to ignore emails from women and people of color than they are to ignore those from white men,   which privileges the educational outcomes of white men by channeling a biased amount of mentoring and educational resources to them.

Discrimination of an individual, community, and institutional levels is a major part of the process of reproducing social inequalities of race, class, gender , and sexuality. For example, women are systematically paid less than men for doing the same work.  

2 Main Social Inequality Theories

There are two main views of social inequality within sociology. One view aligns with the functionalist theory, and the other aligns with conflict theory.

• Functionalist theorists believe that inequality is inevitable and desirable and plays an important function in society. Important positions in society require more training and thus should receive more rewards. Social inequality and social stratification, according to this view, lead to a meritocracy based on ability.
• Conflict theorists, on the other hand, view inequality as resulting from groups with power dominating less powerful groups. They believe that social inequality prevents and hinders societal progress as those in power repress the powerless people to maintain the status quo. In today's world, this work of domination is achieved primarily through the power of ideology, our thoughts, values, beliefs, worldviews, norms, and expectations, through a process known as cultural hegemony .

How Social Inequality Is Studied

Sociologically, social inequality can be studied as a social problem that encompasses three dimensions: structural conditions, ideological supports, and social reforms.

Structural conditions include things that can be objectively measured and that contribute to social inequality. Sociologists study how things like educational attainment, wealth, poverty, occupations, and power lead to social inequality between individuals and groups of people.

Ideological supports include ideas and assumptions that support the social inequality present in a society. Sociologists examine how things such as formal laws, public policies, and dominant values both lead to social inequality, and help sustain it. For example, consider this discussion of the role that words and the ideas attached to them play in this process.

Social reforms are things such as organized resistance, protest groups, and social movements. Sociologists study how these social reforms help shape or change social inequality that exists in a society, as well as their origins, impact, and long-term effects.

Today, social media plays a large role in social reform campaigns and was harnessed in 2014 by British actress Emma Watson , on behalf of the United Nations, to launch a campaign for gender equality called #HeForShe.

Milkman, Katherine L., et al. “ What Happens before? A Field Experiment Exploring How Pay and Representation Differentially Shape Bias on the Pathway into Organizations. ”  Journal of Applied Psychology , vol. 100, no. 6, 2015, pp. 1678–1712., 2015, doi:10.1037/apl0000022

“ Highlights of Women's Earnings in 2017 .”  U.S. Bureau of Labor Statistics , Aug. 2018.

• What's the Difference Between Prejudice and Racism?
• Emma Watson's 2014 Speech on Gender Equality
• Feminist Theory in Sociology
• Definition of the Sociological Imagination and Overview of the Book
• The Major Theoretical Perspectives of Sociology
• What Is Symbolic Interactionism?
• Understanding Socialization in Sociology
• What Is Feminism Really All About?
• Sociological Definition of Popular Culture
• Understanding Meritocracy from a Sociological Perspective
• Major Sociological Theories
• Definition of Ritualism in Sociology
• The Sociology of Race and Ethnicity
• Understanding Functionalist Theory
• Introduction to Sociology
• Conflict Theory Case Study: The Occupy Central Protests in Hong Kong

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A Developmental Science Perspective on Social Inequality

Laura elenbaas.

1 University of Rochester

Michael T. Rizzo

2 New York University

3 Beyond Conflict Innovation Lab, Boston, MA

Melanie Killen

4 University of Maryland

Many people believe in equality of opportunity, but overlook and minimize the structural factors that shape social inequalities in the United States and around the world, such as systematic exclusion (e.g., educational, occupational) based on group membership (e.g., gender, race, socioeconomic status). As a result, social inequalities persist, and place marginalized social groups at elevated risk for negative emotional, learning, and health outcomes. Where do the beliefs and behaviors that underlie social inequalities originate? Recent evidence from developmental science indicates that an awareness of social inequalities begins in childhood, and that children seek to explain the underlying causes of the disparities that they observe and experience. Moreover, children and adolescents show early capacities for understanding and rectifying inequalities when regulating access to resources in peer contexts. Drawing on a social reasoning developmental framework, this paper synthesizes what is currently known about children’s and adolescents’ awareness, beliefs, and behavior concerning social inequalities, and highlights promising avenues by which developmental science can help reduce harmful assumptions and foster a more just society.

Despite the fact that many people believe in equality of opportunity, many also overlook the structural factors that shape social and economic disparities in the United States and around the world. These structural factors include, for example, historical and current exclusion from residential, educational, and occupational opportunities on the basis of gender, race, socioeconomic status, or other group memberships ( Bullock, 2019 ; Kraus et al., 2019 ). As a result, excluded social groups continue to have fewer opportunities for upward mobility and experience elevated risk for negative emotional, learning, and health outcomes ( Duncan & Mumane, 2011 ; Wilkinson & Pickett, 2017 ). Psychological science plays a crucial role in illuminating the processes that underlie people’s responses to social inequality. For example, research has shown that social inequalities persist in part because many people under-estimate their true magnitude, are not motivated to correct disparities that benefit their social groups, or hold negative stereotypes about marginalized groups ( Arsenio, 2018 ; Lott, 2012 ; Roberts & Rizzo, 2020 ). In order to address the psychological roots of these inequalities, we need to know where these beliefs and attitudes come from, and how we might encourage a more equitable and just understanding of the causes and consequences of social inequalities. In this paper, we offer a developmental perspective that begins to address these two questions.

In the past decade, developmental scientists have been at the forefront of efforts to understand how youth develop an awareness of social inequalities, seek explanations for their causes, form judgments of their consequences, and enact behavioral responses, based on their personal experiences with social inequalities and the influences of micro (e.g., family, peer) and macro (e.g., school, media) social contexts ( Arsenio, 2015 ; Ruck et al., 2019 ). Although children have few direct opportunities to influence societal-level inequalities (e.g., through voting, protesting), they regularly experience social inequalities in their peer and family contexts, and take on a range of different roles (e.g., perpetuator, rectifier, victim, witness) within these inequalities ( Killen et al., 2018 ). As a result, research is beginning to uncover not only the developmental processes that exacerbate social inequalities, but also potential pathways for promoting greater consideration of equity in childhood. In fact, developmental science is uniquely positioned to illuminate the factors that motivate children and adults to either ignore, exacerbate, or challenge social inequalities in their everyday interactions.

Social Reasoning Developmental Model

One branch of current research on how youth conceptualize social inequalities is informed by the social reasoning developmental (SRD) model ( Killen et al., 2018 ; Rutland et al., 2010 ). The SRD model focuses on reasoning, judgments, and decisions about moral and social issues, and how these processes change across development. It integrates concepts from social domain theory (e.g., how children reason about social-conventional, moral, and personal concerns) and social identity theory (e.g., how intra- and inter-group dynamics shape decisionmaking) to provide a framework for understanding how children make sense of moral issues (e.g., denial of resources) that occur in inter-group contexts.

The SRD model takes a constructivist view in postulating that children’s social-cognitive development stems from their reflections and abstractions based on their everyday interactions which, in turn, enable them to infer, evaluate, and judge actions and events in their world ( Killen & Rutland, 2011 ). In contrast to nativist or socialization perspectives, constructivist theories regarding the origins of social cognition emphasize the central role of the child in actively interpreting and making sense of their social world ( Killen & Smetana, 2015 ; Turiel, 1983 ). Within this broader theoretical perspective, the SRD model proposes that reasoning about morality, group identity, and the psychological states of others emerges early in childhood and coexists throughout development (see Figure 1 ). Each of these domains of knowledge are brought to bear when children and adolescents consider complex issues, such as social inequalities. What changes across development is the complexity of children’s and adolescents’ moral reasoning, the depth of their understanding of social group dynamics, their awareness of others’ mental state capacities, and their ability to coordinate and balance these overlapping concerns.

Social Reasoning Developmental (SRD) Model proposes that children and adolescents bring three forms of knowledge to bear on their reasoning about social inequalities: moral, group, and psychological.

In order to understand the orgins, development, and sources of influence on thinking about social inequalities, research from the SRD perspective has examined how children’s and adolescents’ understanding of moral, group, and psychological concepts are applied to their emerging: 1) awareness of social inequalities, 2) explanations for these inequalities, and 3) behavior aimed at increasing or reducing social inequalities. In this paper, we synthesize research from the SRD framework, as well as related research in developmental science, to outline what is currently known about children’s and adolescents’ awareness, beliefs, and behavior concerning social inequalities, and highlight promising avenues to encourage positive change.

Awareness of Social Inequalities

Being aware of social inequalities means recognizing the existence of disparities in access to resources or opportunities between social groups. On the most basic level, children are cognitively equipped to notice resource inequalities from early in development. Already in their first year of life, infants notice when someone has more toys than someone else ( Sommerville, 2018 ). By the time they reach kindergarten, children attend to wealth inequalities, identifying their peers as “poor” or “rich”, alongside other forms of social categorization (e.g., gender, ethnicity) ( Hazelbaker et al., 2018 ; Shutts, 2015 ). Over the course of adolescence, youth view U.S. society as increasingly economically stratified and also increasingly link economic status and race, associating White and Asian Americans with higher income and wealth than Black and Latinx Americans ( Arsenio & Willems, 2017 ; Ghavami & Mistry, 2019 ). However, even adults under-estimate the true extent to which wealth is unequally distributed in society, as well as the true magnitude of current racial wealth gaps ( Arsenio, 2018 ; Kraus et al., 2019 ).

Moreover, children’s own status or the status of their social group can lead them to deny or minimize the extent of social inequalities. For example, in one recent experiment, Rizzo and Killen (2020) randomly assigned 3- to 8 year-old children to either an advantaged group (had more resources than an outgroup) or a disadvantaged group (had fewer resources than an outgroup). Children assigned to the advantaged group were more likely to see the resource inequality as fair, support attempts to perpetuate the inequality, and keep more resources for their own group when given the chance.

Similarly, Elenbaas and colleagues (2016) randomly assigned European-American and African-American children, ages 5- to 6 and 10- to 11 years, to witness an experimental inequality of school supplies that placed either their racial ingroup or outgroup at a disadvantage. Young children whose ingroup was disadvantaged judged the inequality to be unfair and took steps to correct it, but young children whose outgroup was disadvantaged did not (see Figure 2 ). Older children, by contrast, rectified the inequality under both conditions and reasoned about the importance of ensuring equal access to resources (e.g., “Both schools should have the same amount of supplies for learning”).

Young children corrected a resource inequality that disadvantaged their racial ingroup but not an inequality that disadvantaged their outgroup.

From an SRD perspective, these results reveal what happens when children prioritize group concerns over moral concerns, and how the prioritization of these concerns develops during childhood. Whereas younger children in both studies struggled to balance concerns for ingroup benefit with concerns for equity, older children’s reasoning and decision-making reflected a more generalized concern for ensuring fair access to resources that took precedence over social preferences. Because ingroup concerns remain common throughout development, however, it is important to identify which social contexts enable children and adolescents to see the bigger picture and align their moral behavior with their moral judgments.

Explanations for Social Inequalities

Generating an explanation for a social inequality entails forming beliefs about how disparities in access to resources or opportunities between social groups came to be. Children and adolescents are able to consider multiple possible sources for social inequalities, and not all sources are perceived to be unfair ( Arsenio & Willems, 2017 ; Flanagan et al., 2014 ; Starmans et al., 2017 ). For instance, many people –youth and adults– explain social inequalities in terms of traditions and authority, including the need to maintain a predictable status quo and the idea that it is normal or typical for some groups to succeed and others not to. Other explanations are moral in nature. For instance, social inequalities cause direct and indirect harm to members of marginalized groups as a result of systemic discrimination and are thus in need of rectification. Finally, many explanations weigh moral, societal (economic systems), and psychological rationales, including beliefs that economic systems are designed to give everyone an equal pportunity for upward mobility and that a certain amount of inequality in society is motivating for people.

By kindergarten, children believe that greater effort entitles an individual person to a greater share of rewards (e.g., someone who tries harder at a game deserves to keep their winnings) ( Rizzo et al., 2016 ). However, when scaled up to the social group level, early-emerging judgments about merit can lead to negative stereotypes that marginalized and excluded groups “deserve” their status. For instance, young children stereotype poor peers as less competent than rich peers ( Shutts et al., 2016 ). Similarly, children hold stereotypes that African-Americans are less hardworking than European-Americans and girls are less intelligent than boys ( Bian et al., 2017 ; Pauker et al., 2016 ). In fact, although adolescents are more likely than children to generate structural explanations for social inequalities (e.g., systemic racism, classism, or sexism), these explanations typically exist alongside problematic assumptions about differences in social groups’ motivation, effort, and ingenuity, rather than replacing them ( Flanagan et al., 2014 ; Godfrey et al., 2019 ).

Explaining the underlying causes of social inequalities is challenging because observing an existing disparity (e.g., a racial disparity in access to education) does not provide enough information to infer its cause, and because the messages that children receive (e.g., from adults, media sources) about the nature and origins of social inequalities are often incomplete or ambiguous. As a result, children’s awareness and understanding of the complex structural factors underlying social inequalities (e.g., political systems that exclude the poor, residential systems that exclude ethnic minorities, educational systems that exclude girls) is limited and interacts with other cognitive biases. For example, when children are asked to generate explanations for resource inequalities between novel groups (e.g., the Orps and the Blarks), children often assume that group differences resulted from internal factors (e.g., work ethic, natural ability) rather than external factors (e.g., discrimination) ( Hussak & Cimpian, 2015 ).

Behavior in Contexts Involving Social Inequalities

Children’s and adolescents’ reasoning about the causes of social inequalities informs their thinking about what (if anything) should be done to address them. For example, in one experiment, Rizzo and colleagues (2018) tested 3- to 8-year-old children’s responses to individually-based inequalities (i.e., one peer received more prizes than another because they worked harder) or structurally-based inequalities (i.e., one peer received more prizes than another because the person giving out prizes had a gender bias). In response to the individually-based inequality, children gave more resources to the hardworking peer and reasoned about merit (e.g., “She did a better job at the activities”). In response to the structurally-based inequality, children gave more resources to the peer who had received less because of a gender bias and reasoned about equality (e.g., “They should get the same number”). These results confirm young children’s belief that individual effort should be rewarded, but also highlight emerging concerns for equity in response to structurally-based inequalities. When children had clear and unambiguous evidence that resources were allocated unjustly, they acted to correct the disparity.

Similarly, one recent experiment informed early adolescents that access to an educational opportunity (a science summer camp) had historically been restricted such that only wealthy children or only poor children had attended ( Elenbaas, 2019a ). When they had the chance to determine who should attend the camp “this summer,” participants favored the group that had been excluded in the past, particularly when that group was poor. Moreover, the larger the economic “gap” in access to opportunities that participants perceived in broader society, the more they supported including poor peers in this particular opportunity (see Figure 3 ) and reasoned about fair access to learning (e.g., “Everyone has the right to education no matter what background they come from”).

Early adolescents who perceived a larger economic “gap” in access to opportunities in favor of high-wealth peers were more supportive of including low-wealth peers in a learning opportunity.

These studies, both drawing on the SRD model to understand children’s and adolescents’ reasoning and behavior in contexts involving moral issues (differential access to resources and opportunities) on inter-group levels (involving gender or social class), have intriguing implications for how to reduce harmful stereotypes about the causes of social inequalities. When children know –from their own direct observations or from others’ testimony– that an inequality is rooted in structural discrimination or bias, most children support efforts to reduce it. The challenge is that children rarely receive this direct and unambiguous evidence. While the idea that anyone can achieve success with enough effort and ambition is widely available to children in national, social, and educational discourse, children receive far less consistent information about the historical and societal contexts for why some social groups are advantaged over others. However, this may offer a point of entry for adults interested in increasing children’s recognition of the complex structural causes of social inequalities.

Supporting Complex Reasoning about Social Inequalities

Providing opportunities for analysis and reflection on the sources and consequences of social inequalities may help youth develop a critical understanding of the social, economic, and political systems that they are a part of ( Seider et al., 2018 ). For example, research on family racial-ethnic socialization indicates that conversations about discrimination can contribute to adolescents’ structural explanations for social inequalities (e.g., systemic racism) ( Bañales et al., 2019 ). Similarly, research on civic engagement has shown that adolescents who frequently discuss current events with their parents have a better understanding of structural contributors to poverty ( Flanagan et al., 2014 ). Likewise, research on critical consciousness indicates that discussions with parents, teachers, mentors, and peers can foster adolescents’ awareness of sociopolitical conditions and motivation to address social inequalities ( Diemer et al., 2016 ). Although little research has examined the messages about social inequality that pre-adolescent children may receive, they, too, are becoming aware of social inequalities, and likely consider their parents’ and teachers’ opinions when forming beliefs about their causes.

Relationships with peers whose experiences differ from their own may also help youth reject stereotypes and develop a deeper understanding of social inequalities. For instance, research on inter-group contact indicates that having a friend from a different racial background is associated with lower racial stereotypes ( Aboud & Brown, 2013 ). Similarly, cross-SES friendships may encourage children’s fairness reasoning. In one recent study, children from zupper-middle income families who reported more contact with peers from lower-income backgrounds were more likely to reason about differences in access to resources when sharing toys, and shared more equitably ( Elenbaas, 2019b ). Although, it is not yet known whether interactions with higher-SES peers have a similar impact on lower-SES children’s reasoning, these results point to how everyday interactions with friends may raise children’s consideration of the immediate consequences of resource disparities.

Future Directions for Research

Understanding children’s and adolescents’ thinking about social inequality is a new area of research in developmental science ( Ruck et al., 2019 ). We now know that youth face challenges in becoming aware of the existence and extent of social inequalities, understanding their structural causes, and deciding how to address social inequalities. Moreover, both the potential for ingroup benefit and negative stereotypes about disadvantaged groups lead to more exclusive and inequitable behavior.

We also know, however, that children’s concerns for justice and fairness emerge early, and enable them to identify and work to correct instances of inequality within their sphere of influence. We suggest a continued research focus on the questions of origins and development that have framed a great deal of work in this area thus far, but also increased attention to the sources of influence on children’s thinking. Drawing on the constructivist perspective of the SRD model, we suggest that future studies investigate the joint and separate roles of interacting with diverse peers, interpreting conversations’ with parents and teachers, and reflecting on societal structures on children’s and adolescents’ reasoning, judgments, and behaviors in contexts of social inequality. Continued investigation of how children recognize, explain, and respond to social inequalities may provide a basis for ameliorating their detrimental outcomes and fostering a more just society.

Acknowledgements

Melanie Killen was supported by grants from the National Science Foundation, BCS1728918 and the National Institutes of Health, NICHDR01HD093698 while working on this paper.

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Social Inequality in the United States Essay

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Introduction

Inequality in america today.

Social inequality refers to the difference in the quality of life experienced by different people in the same community, usually between the rich and poor. Continued experience with this inequality leads to the establishment of class structures or social stratification. America is a prime example of such a society. Indeed, it is not hard to see that there are people who have so much wealth and receive big incomes, whereas others have too little wealth and receive close-to-non-income.

Is the U.S. truly the land of equality?

Despite the example mentioned above, it would be erroneous to classify America as a truly unequal society. This is because it has been in the American tradition to reduce the gap between its rich and poor. Indeed, American society provides equal opportunities for members of different structures to increase their wealth so they can all be better off. This scenario makes America a true land of quality; which is achieved through the provision of an enabling environment. As a result, poor people in America have a higher chance of climbing the class ladder than their counterparts in other parts of the world (The Economist, 2006).

The reason, the American society has been concentrating on increasing its economic productivity as a way of helping its poor escape poverty. Contrary other countries, including the rich ones in Europe, have concentrated on taking wealth from the rich through higher taxation as a way of helping their poor. Also, it is noticeable that American poor have been getting into better lives than their counterparts in other parts of the world; the rich have been getting richer. On the other hand, the rich in other parts of the world have seen their wealth rise slightly remain stagnant whereas the poor see their plights stay the same. This is despite the efforts made by respective governments to reduce the gap between the two groups.

Recent reports indicate that national wealth going to the richest one percent increased from eight percent in 1980 to sixteen percent in 2004, whereas the percentage of national wealth going to the poor one percent increased by a slimmer margin (NPR, 2007). This has been taken by many people to mean that America’s wealthy have been taking the entire national income home, whereas the poorer are getting even more destitute. But this is an utter exaggeration because it can easily be established that America’s poor have been experiencing better lives at a higher rate than their European counterparts; this is indicated by fact of increased home and motor vehicle ownership, education attainment, and the overall quality of life (NPR, 2007). The rising gap between the rich and poor in America is making many people claim that American inequality is increasing rapidly. However, critics are ignoring the fact the productivity of American society has resulted in rising living standards for all citizens.

The United States, therefore, serves as a society that is unequal but is applying the necessary measures to ensure that the gap between the rich and poor is bleached through methods that will leave all groups better-off. This method is none other than rooting for economic growth that provides opportunities to all in society. Other countries in the world, especially those in Europe have some lessons to learn from America, failure of which will lead to exacerbation of their inequality crisis.

The Economist (2006). America Inequality . Web.

Berliner, U. (2007). Haves and Have-Nots . Web.

• Feminization of Poverty - A Grave Social Concern
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• Poverty Level in any Country
• Theories of Fertility. Economics Aspect and Poverty.
• Evaluating the Self-Esteem of the Homeless
• The Cultural Construction of Poverty
• Poverty in the US: Causes and Measures
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Global Inequality

• First Online: 31 August 2024

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• Stephen Chadwick 2  

Inequalities exist in all societies, and the four social contract theorists under discussion here attempt to address this issue to some extent. However, given the prevailing global order at the time each was writing, it is unsurprising that none questions the responsibilities citizens of one state have in alleviating poverty in another state. This issue will be examined here. Among the theories being analysed, Locke’s theory of property rights is the most developed. Therefore, this chapter will examine whether we can establish a consistent theory of international distributive justice based on Locke’s notions of fairness in distributing resources within a state and his views on the relationships between states in the international state of nature.

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https://wir2022.wid.world/www-site/uploads/2021/12/WorldInequalityReport2022_Full_Report.pdf

For example, C.B. Macpherson ( 1962 ) and Leo Strauss ( 1953 ).

It must be stressed that it is unlikely that Locke himself, i.e. the historical Locke, would have advocated the view proposed here. See the assessment of Locke, the person, presented by Neal Wood ( 1984 , 74–75).

Locke is quoting Psalm 115, v. 16.

Lockes use of the term ‘labour’ is very broad—for example, in picking up acorns, I mix my labour with them and they become my property.

Many contemporary philosophers argue that there cannot be any legitimate original appropriation and individuals cannot thus generate property rights themselves. For example, see Jeremy Waldron ( 1988 ) and Leif Wenar ( 1998 ). However, Bas van der Vossen ( 2009 ) and ( 2021 ) provides an excellent argument to show that a Lockean account can overcome this problem. See also Sanders ( 1987 ). 

This term was coined by C.B. Macpherson ( 1962 , 214).

Waldron was the first to name it the “enough and as good clause” (Waldron 1979 , 319). See also Waldron ( 1983 ). This clause is sometimes known simply as “the Lockian proviso” by libertarian thinkers (Nozick 1974 ). However, as there are three important ‘provisos’ that we must consider this name will not be used here. See also Palmer (2013) and Tomasi ( 1998 ) and Varden ( 2012 ).

Theories that hold property rights as being a central pillar of justice are often called libertarian. There are, of course, a wide variety of such theories. Extreme right-libertarians hold that there are no limits on the acquisition of property, and would reject the ‘enough and as good clause’ outright. (See Rothbard ( 1978 ) and Rothbard (1982), Narveson ( 1988 ) and Freser ( 2005 ) for examples.) Left-libertarians, on the other hand, argue that property acquisition is limited. We will see that Locke must be considered a moderate left-libertarian, or at the very least a moderate right-libertarian. For similar views see Daskal ( 2005 ) and Wendt ( 2017 ).

This suggests that Locke’s theory of appropriation is not just a theory about acquisition, because through the spoilage proviso it includes an element concerning what can be done with the object once it has been acquired.

Some scholars argue that there is also a ‘charity proviso’ (Widerquist 2010 ). We will address this issue later.

For an attempt to formalise this clause see Kogelmann and Ogden ( 2018 ). See also Makovi ( 2015 ). 

Cohen ( 1995 ) thinks this claim is absurd. For an excellent rebuttal of Cohen see Russell ( 2004 ), who succinctly explains why Locke considered labour so important in his overall philosophy. He says, “land and labor differ by an order of magnitude. Labor is thus an entirely different kind of producer—it is, in a very real sense, the producer of goods in our world” (Russell 2004 , 312). See also Sanders ( 1987 ). 

There can, of course, be areas of common grazing which do not become the property of those that cultivate it. But such areas have been left in common by contract and not by nature. The people have decided among themselves that the land is to be left in common, for the good of society (Locke 2016 , sec. 34).

For example, Bell ( 2005 ), Hailwood ( 2005 ), de Geus ( 2001 ), Stephens ( 1999 ), Bromley ( 1991 ), and Cahn ( 1995 ).

For a discussion of Locke’s theory of appropriation and its environmental consequences see Liebell ( 2011 ).

Those left-libertarians who think this include Steiner ( 1994 ), Steiner ( 2011 ), Peter Vallentyne ( 2002 ) and Vallentyne (2005), and Michael Otsuka ( 2003 ).

For a good analysis of this aspect of Locke’s theory see Ryan ( 1984 ).

Harding ( 2019 ) makes a similar point.

See Wood ( 1984 , 55–56) and Wolf ( 1995 , 799–800).

As Tully says, “since a person has a property for the sake of preserving himself and others, once his own preservation is secured, any further use for enjoyment is conditional on the preservation of others” (Tully 1980 , 132).

In fact, as Forde ( 2009 ) points out, for Locke, “the peace and preservation of mankind” is its actual identity. Locke repeatedly makes this claim throughout the Second Treatise— see secs 6, 7, 8, 11, 128, 135, 182.

John Locke ( 2016 , sec. 42). It is obvious from this quote that by “charity” Locke means something much stronger than what we mean today. For his sense, it gives men a title , i.e. a right , to the means of subsistence. In sec. 5 of the First Treatise , he points out that Richard Hooker “derives the great maxims of justice and charity”. That there are maxims of charity suggests a clear difference in meaning from its contemporary usage. See Winfrey ( 1981 ) and Forde ( 2009 ) for excellent discussions of this.

The strength of Locke’s position is often disputed by commentators. For example, Nozick thinks that the enough and as good clause is only “meant to ensure that the situation of others is not worsened” (Nozick 1974 , 175). Otsuka ( 2003 ), 23) argues that there is little evidence for this claim, however.

From a moral point of view Locke certainly appears to disapprove of unlimited appropriation, as he says that “the desire of having in our possession, and under our dominion, more than we have need of, [is] the root of all evil” (Locke 1996 , pars. 103–105). He goes on to say, “power and riches, nay virtue itself, are valued only as conducing to our happiness” (Locke 1996 , par. 143)

See Shrader-Frechette ( 1993 ) for a discussion of this point.

Wendt ( 2017 ) calls this the ‘sufficiency proviso’.

Since a right to property requires appropriation, and appropriation requires the ‘mixing of labour’, can we make any sense of a state having a right to property? What would it mean for a state to mix its labour, over and above a collection of individuals mixing their labour? This brings out the difficulty with the way language is used by the internationalist. Does it even make sense to say that states have rights?

This is probably the view that Locke himself held.

Narveson claims that the Lockean proviso “as a restriction on initial acquisition of the type it is all but universally regarded as being, it is baseless and must be jettisoned” (Narveson 1999 , 224). However, his argument seems to ignore the huge percentage of the world’s citizens who live in abject poverty. He also thinks “the most important kind of property we can have is, broadly speaking, intellectual rather than material, including knowledge of processes, formulas, and the like, as well as academic and literary writings” (Narveson 1999 , 223). This is probably not a sentiment with which those who are experiencing extreme poverty would agree.

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Book Review

• Tianhao Zhi (United International College)

This article reviews C. Aspalter’s latest book Super Inequality . The book consists of a collection of Aspalter’s essays in (i) public choice theory, (ii) a theory of social efficiency, and (iii) a theory of super inequality. Not only had it provided us with a timely and systematic explanation regarding the causes of super inequality, but also a myriad of other social issues such as persistent social divide, inflation, a lack of education, and Medicare for many people. The book starts from a foundation of behavioral economics, which attempts to explain why humans make inferior choices when better options are available, with an emphasis on the context of public choices. Aspalter further elaborates on a General Theory of Z-Efficiency. Mainstream economists often focus merely on economic and allocative inefficiency, while ignoring other forms of social inefficiency arising from non-economic factors such as environmental, managerial, and personal and social barriers. The realization of higher general efficiency requires sound social policy design beyond the conventional laissez-faire, neoliberal economic approach. The book continues to build a general theory of super inequality from the lens of the Z-inefficiency measure. In our current world of fast-changing technological progress, thanks to the development of AI, big data, and blockchain technology, it is never a better time to contemplate the ramifications of a technological paradigm shift and how it will affect social efficiency overall. To this end, Aspalter’s General Theory of Z-Efficiency and Super Inequality laid a promising path for future research in this direction.

Keywords: public choice theory, a general theory of Z-efficiency, super inequality

Zhi, T., (2024) “Book Review”, Social Development Issues 46(3): 12. doi: https://doi.org/10.3998/sdi.6776

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Christian Aspalter (2023) , Super Inequality: Theoretical Essays in Economics and Social Policy. Springer Nature, 158 p. ISBN-13 978-9-81995-168-0 (Hardcover). $ 109.99.

The Laisse-Faire Economics Fairytale Coming to Another End

Once upon a time, all students of economics were imparted with a profound fairytale, and when those economic students became economist adults, they were very often led to believe that the fairytale is how the world actually works. As the fairytale goes: somewhere on an island where people live and trade and prosper; there exists a platonic market that functions to its maximum economic efficiency only when it is not intervened by the authority: in such an economy, every player, consumers, and producers alike, behaves rationally and selfishly. They gather in a marketplace to fully realize their happiness and material wealth: consumers are the utility maximizers while producers are the profit squeezers. Competition ensures the best of goods and services being produced at the most efficient market price where the producers earn zero economic profit in the long-run equilibrium and maximum economic surplus is realized for both consumers and producers. The division of labor will not only allow the individuals to focus on what they are comparatively advantageous, but also give rise to international trade that enables nations to focus on their comparative advantage and benefit from higher economic well-being through the exchange of goods and services produced by other nations with their own distinct comparative advantages. Economic growth will be sustained by innovation that ensures the breaking of old equilibrium to the new and everyone will live happily ever after.

This well-told fairytale, as history had documented, had temporarily, or perhaps illusively aligned with the economic reality for a limited period until a full-blown financial or social crisis that caught people unprepared and devastated when their life savings were wiped out and billions of dollars evaporated in the frightening market stampede: from the 1929–1939 the Great Depression to the 1980 Japanese economic crisis, to the 1996 Asian financial crisis, up to the more recent 2007 Global Financial Crisis. Every crisis reminds us of an old French proverb: “plus ça change, plus c’est la même chose (the more things change, the more they stay the same)” , and every crisis serves as a timely reminder that the economic reality is far more complex than what the economic fairytale depicts.

We often associate the financial and social crises with a simple explanation of market failure , and we often solve the economic issues merely from economic toolkits: environmental pollution arises from negative externality, information asymmetry misled the market-clearing prices, people sometimes behave irrationally, etc. Amid the radical fear and uncertainty, we often apply sub-optimal economic remedies that may alleviate the issue in the short-run and sometimes worsen the situation in the long-run: be it an astronomical fiscal stimulus or a radical monetary expansion, or a combination of both. However, the reoccurring economic crises and social issues, combined with the inability of economic policy to eradicate the long-term issues, have left us to wonder: is it all but a simple ramification of market failures? Are there deeper causes of social imbalances that perpetuate and aggravate the pendulum of economic and social cycles from hundreds of years ago until now? Will it be an ultimate solution that would eternally end the crises and human sufferings, and ultimately project the economy in particular and the society in general on a long-term path of prosperity, equality, and sustainability?

Super Inequality: Going Beyond Laisse-Faire Economics to a Better Understanding of Economic and Social Crises

C. Aspalter’s new book: Super Inequality: Theoretical Essays in Economics and Social Policy provides us with a timely reminder that the malfunctioning of laisse-faire market alone, neglects a deeper root cause of the social-economic crises aforementioned. Super inequality arises not merely as a result of market failures, but more importantly from an inherent imperfection of decision-making in radical uncertainty, combined with systemic institutional construct by political and social elitists.

Distorted Choices: A Perspective from Behavioural Economics

Aspalter starts his analysis with a general theory of distorted choices . The key question is: why do people make inferior choices when better options are available? It may sound a little cliché to claim that people are not always rational when making important decisions: there is already a plethora of literature in behavioral economics regarding bounded rationality of economic agents due to psychological factors, cognitive limits, emotions, greed, and fear, or may simply due to laziness ( Akerlof & Shiller, 2009 ; Kahneman & Tversky, 1979 ). Yet it is less discussed about public choices, which differs from private choices of market behaviors. Some might argue that public choices are much less urgent for individuals (people have ample time to make choices and more information is available compared to private decisions, such as investment decisions when decisions have to be made in a small time frame with limited information), and public officials are often portraited in laissez-faire economics as possessing an ideal-typical, Mahatma Gandhi element of altruism, as Aspalter describes. Hence, the general law of rationality applies, implying that decision can be understood from the decision of a rational, representative individual, in other words, the macro phenomena is micro-founded. Yet there is plenty of evidence that defies this convenient thinking, particularly in the area of the social welfare system, as Aspalter observes:

“This really explains why the vast majority of welfare state systems around the world still stick to horrible social policy choices, such as asset- and means-tests (AMTs), even though already a long-time ago economists and now also social policy scientists have come to see the poverty-exacerbating, poverty-spreading and poverty-cementing effects of any social program that is based on or uses asset- and means-tests, including proxy asset- and means-tests.” (C. Aspalter, 2023 , p. 29)

The distorted choice is not merely an outcome of bounded rationality of the masses but is often exacerbated by the systemic coercion and manipulation by political and corporate elites. More often than not, public officials, like private individuals, are self-interested too. Rent-seeking behavior arises when the self-interested public authorities intertwine with corporate interests ( Holcombe, 2018 ).

With a foundation of behavioral economics and sociology of Holcombe and Foucault, Aspalter identifies six types of determining factors: (i) systems of cultural biases and cultural variance; (ii) aggregate historical factors; (iii) geographical factors; (iv) effects of cultural, social, societal, governmental, judicial, or economic discrimination and exclusion, (v) government interference in terms of availability of resources and opportunities, and (vi) judicial interference in terms of punishments. This serves as a foundation in the discussion of public policy efficiency that stems not only from an allocative factor of Leibenstein sense (X-efficiency) but also from managerial and environmental barriers, as well as from inferior choices of the masses, as is further elaborated in following sections.

Beyond Economic Efficiency: The Theory of Z-efficiency and Super Inequality

When we teach ECON101 class, the concept of economic efficiency is usually introduced right after the first lecture on supply and demand and market-clearing equilibrium. The shaded area of consumer and producer surplus becomes the golden rule to measure economic efficiency. The market functions at its optimum only when it is free from external distortion, such as the benevolent act of the government to set price ceilings and floors, or in a market where monopoly dominates the markets. The lack of competition or the presence of external policy intervention will result in a deadweight loss, thus lowering overall economic efficiency. Furthermore, Leibenstein (1966) expounds on the notion of X-inefficiency due to a lack of competition, which disables the firms to produce on its full production possibility frontier and raises the cost curve. Only later the concept of market failure was introduced in the form of information asymmetry and externality, combined with people’s inability to make rational decisions that often lead to sub-optimal situations. The way we address these types of market inefficiency is usually by resorting back to the market force itself, such as pricing and marketizing externalities and information. The ultimate principle remains unchanged: let the invisible hand to fix the problem of laissez-faire economy itself . This principle is often easily, yet forcefully adopted for other non-economic social issues.

It is true that the economic system is a crucially important subset of a social system, yet they are not equivalent. It is misleading to gauge other types of social efficiency in the same way as we measure economic efficiency, such as the provision of public goods, the removal of social, cultural, and managerial barriers, and so on. Built from the theoretical foundation of the predecessors ( Foucault, 1954 ; Holcombe, 2018 ; Luhmann, 1984 ), Aspalter proposed a general theory of efficiency taxonomized in four broad categories, namely the M-, N-, Y-, Z-efficiency, in addition to Leibenstein’s X-efficiency aforementioned. M-inefficiency arises due to managerial barriers, N-efficiency due to environmental barriers, and Y- and Z-inefficiency from personal-level influences.

Sound policy ought to be judged by whether it brings forth the maximum social efficiency. From the renewed perspective in measuring efficiency from the four additional dimensions, it is tempting to do a thought experiment of a hypothetical society with the highest possible general efficiency, just like how classical economists describe the way an ideal laissez-faire economy works. We envision that in such a society with the highest general efficiency, not only does it possess a competitive market economy that yields the highest allocative efficiency and the Leibenstein X-efficiency, but also a full managerial/governance efficiency in the public sector, and a complete removal of natural, physical, social, cultural, and environmental barriers, thanks to the advancement of technology and effective governance (the maximum M- and N-efficiency). In such a society, every individual is fully capable of making the best decisions for themselves free of knowledge and physical constraints, thanks to viable social programs that make education and healthcare affordable and in line with the long-term interests of every member of the society (the maximum Y-efficiency and Z-efficiency). This ideal is perhaps still far-fetched, yet it can serve as an ultimate goal of setting optimal social policies.

“Every problem, every mental formation, every social problem can be overcome. The only downsides are time and efforts needed, i.e. the longer a problem lasted, or the more severe the repercussions (suffering and harm caused) were, the longer it may in general take to heal them, i.e. to soften them and in the end to dissolve them.” (C. Aspalter, 2023 , p. 76)

Looking Ahead for a Better Future

“Modern methods of production have given us the possibility of ease and security for all; we have chosen instead to have overwork for some and starvation for others.” — Bertrand Russel, In Praise of Idleness

Toward the end of the book, we are well-equipped with an alternative lens to look at many prevailing social issues in the Western world today that laissez-faire economic fails to explain: high inflation, persistent social divide, myopic corporatism, lack of access to education, and healthcare resources for many due to financial barriers and suboptimal insurance scheme, and above all, the rise of super inequality.

Capitalism can be immensely creative: we constantly see new products emerging: from Ford’s T-model nearly 100 years ago, to the modern-day smartphone and AI technology, and undoubtedly to a promising future of everincreasing standard of living, thanks to the brave entrepreneurial pursuits of the creative, industrious individuals and social economic entities ( Schumpeter, 1939 ). Capitalism can also be frighteningly destructive: the adoption of new technology often outpaces people’s complacency. While new jobs were created, more traditional jobs were lost, leading to anger, frustration, fear, and riots. We benefit tremendously from the creative side of capitalism, yet we often downplay the dark side: myopic, selfish, speculative, unequal, predatory, and eventually self-destructive, as vindicated by countless financial and social crises in history.

Looking back, the profound lack of social efficiency consideration in policymaking in the heyday of neoliberalist optimism had led to a systemic neglect of many social issues, which planted the seeds for many subsequent social and economic crises later on. Not long ago, we had an illusion of “The Great Moderation” , and we were passionately teaching this illusion in macroeconomic lectures. With blind faith in the invisible hand, higher education, Medicare, along with many important public goods were privatized. Since then, education and healthcare have become increasingly unaffordable, pushing more people into lifelong debt and despair. Financial markets and financial institutions that ought to be under tight regulation and public scrutiny, thanks to the bitter experience of the Great Depression of 1929–1939, were once again deregulated and liberated. In the aftermath of the 2007 GFC, radical and unconventional QE , 1 which was meant to provide emergent liquidity to the troubled financial institutions in the hope of eventually alleviating long-term economic issues, had instead worsened the gap between the 1 percent of the financial elitists and the 99 percent of everyone else, aggravating the problem of super inequality.

The pendulum of the business cycle keeps swinging in its own course, and we are currently moving forward from the debris of one historical crisis to a brave new world of unprecedented challenges and opportunities, thanks to the development of AI, big data, and blockchain technology, along with many other emerging technologies. It is never a better time to contemplate the relationship between technological progress and super inequality from the lens of Aspalter’s General Theory of Z-Efficiency, in the hope of preventing future crises. While we cannot retreat to the stinky and ignorant era of the Medieval old days, we need a proper understanding of the complex and intertwining relationship between technological progress and Z-efficiency to adapt to a better new world. Does technological progress benefit everyone, or just a small handful of a few elitists? Would automation and AI reshape our workforce and render it more productive, creative, and innovative, or will it lead to a mass unemployment issue and even a deeper social crisis? What kind of financial market and financial institutions would foster sustainable growth from technological innovation, while reducing Z-inefficiency and delivering higher social well-being? We do not have answers to these questions at the moment, but I am convinced that Aspalter’s general theory of Z-efficiency and super inequality has laid a strong foundation and a promising theoretical framework to tackle these issues in future research endeavors.

• Quantitative Easing. ⮭

Akerlof, George A., & Shiller, Robert J. (2009). Animal spirits: How human psychology drives the economy, and why it matters for global capitalism . New Jersey: Princeton University Press.

Aspalter, Christian. (2023). Super inequality: Theoretical essays in economics and social policy . Springer: Singapore, ISBN: 978-981-99-5168-0.

Foucault, Michel. (1954). Maladie Mentale et personnalité . Paris: Presses Universitaires de France.

Holcombe, Randall G. (2018). Political capitalism: How political influence is made and maintained . Cambridge: Cambridge University Press.

Kahneman, Daniel, & Tversky, Amos. (1979). Prospect theory: An analysis of decision under risk . Econometrica , 47(2), 263–291. https://doi.org/10.2307/1914185 https://doi.org/10.2307/1914185

Leibenstein, Harvey. (1966). Allocative efficiency vs. X-efficiency. The American Economic Review , 56(3), 392–415. https://doi.org/10.2307/2551810 https://doi.org/10.2307/2551810

Luhmann, Niklas. (1984). Soziale Systeme . Frankfurt A.M.: Suhrkamp.

Russel, Bertrand. In praise of idleness. Retrived from https://files.libcom.org/files/Bertrand%20Russell%20-%20In%20Praise%20of%20Idleness.pdf https://files.libcom.org/files/Bertrand%20Russell%20-%20In%20Praise%20of%20Idleness.pdf

Schumpeter, Joseph A. (1939). Business cycles: A theoretical, historical, and statistical analysis of the capitalist process . New York: McGraw Hill.

Tianhao Zhi, Faculty of Science and Technology, BNU-HKBU United International College, China. He can be contacted at [email protected].

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Poverty and Inequality in the World, Essay Example

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Poverty and inequality are two matters at all times influencing one another. Undoubtedly, where there is poverty there is also inequality happening on a social level.  These two terms, applied when discussing society in its entirety, are utilized to describe how inequality on an economical level affects social statuses, making room for let us say lucky groups, the ones able to afford almost anything and the unlucky, those who can barely make it from one day to another. Thereof, these two terms describe the cause and effect of the economic system, however complex it might be.

The main actors included in this process are, actually, the people living in the society and, also, the system at work in the society, by means of which people can or cannot get advantage insofar as to make their lives better. The actors included in the inequality process are, therefore, people on the one hand and, on the other hand, the economic system active in a particular society. This is exactly why the matter could not be discussed generally, but applied to each country in part.

The main focus of each scholar is that of identifying the most efficient strategies by means of each poverty to be avoided and inequality disposed of. However, given the complexity of the problem and the variety of variables which influence it, my standpoint is that no general strategy can be found, no strategy which, if applied anywhere, could solve such a sensitive matter. More precisely, distinct solutions should be sought and applied, afterwards, in each country in part.  I do not ignore the fact that relevant insights could be derived from one country which could aid solve the problem in another country, but that is not, under no circumstance, enough. In other words, global citizenship philosophy should be understood as the point of departure for the struggle of highlighting the efficient solutions towards eliminating inequality in societies.

Thereof, the main question I wish to bring to debate is that of identifying whether it would be more relevant that a united team of researchers would study a corpus of distinct societies in order to put together a strategy which would help eliminate inequality or that the same team of researchers would study the same country and its society, irrespective of the other insights derived from distinct societies, with the same scope. This question parts from the discussions in ”Globalization. A very short introduction”, by Manferd B. Steger. This made me realize that such a scope implies a numerous of variables to be taken into consideration and, however, contextualization, especially at a time in which globalization is rapidly escalating.

Probably, the most important aspect of such a research consists of the capabilities of the specialists of identifying the exact characteristics of each society in part which would affect, in any way, the rise of inequality. The presupposition stands clear. Each society has characteristics that influence the economic process, some of which are the great historical moments it went through, the collective mentality, the political system, the social intake of the differences between people, from the ways in which one can go from one social status to another until the way in which women are being viewed in comparison to men. Thereof, the question I propose stands relevant from the point of view that the strategy which, for example, would be applicable in a society in which women are expected to be paid far less than men occupying the very same positions would not be efficient in a society in which women are already highly emancipated and are not expected to be stay-at-home mothers for a long period of time.

Steger, B. “Manfred. Globalization: A Very Short Introduction.”

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• Published: 04 September 2024

Does women’s higher education reduce wage inequality? Evidence from Palestine using repeated cross-sectional data

• Najiba Morar 1 , 2 &
• Sameera Awawda 2  

Humanities and Social Sciences Communications volume  11 , Article number:  1133 ( 2024 ) Cite this article

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Despite the increase of the share of highly-educated women, gender wage gap remains an ongoing issue in developing countries. The increase in women’s education would provide them with more job opportunities resulting in higher employment rate amongst women and, thus, lower gender pay gap. In Palestine, the share of women with high education is 62% while their labor force participation rate is only 18%. This paper examines the effects of gender higher education on wage inequality in the Palestinian context. The study applied the Mincer equation to study the determinants of wage, while the decomposed Gini coefficient is used to measure the contribution of education and other factors to overall wage inequality. The study used data from the labor force survey (LFS) which is conducted by the Palestinian Central Bureau of Statistics (PCBS) covering the period from 2010 to 2020. Results show that those with higher education have relatively higher wages as compared to those with only high education or with school education. Results also show that gender wage inequality has increased during the study period (2010–2020), but the contribution of both gender and education differences to the overall wage inequality has decreased. In general, the gender pay gap remains a crucial issue in the Palestinian context with a persisting decreasing pay gap over time across all education levels. Policymakers shall orient efforts towards investing in women’s education, thus increasing their empowerment in the labor market, which in turn would improve the level of development and economic growth in the country.

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Gender, education expansion and intergenerational educational mobility around the world

Introduction.

The human capital theory suggests that education affects individual earnings, countries’ economic growth, and level of development. It highlights the undeniable importance of education as an investment in personal and societal economic growth and development (Gregorio and Lee, 2002 ; Kao et al., 1994 ). Empirical evidence shows that education is a key driver of social mobility as it reduces gender inequality, especially the inequality of opportunities (Adnan, 2015 ; Asadullah and Yalonetzky, 2012 ; Jacobs, 1996 ). The expansion of education has been often viewed as a critical policy instrument for combating rising income inequality over the medium term, not only by promoting economic growth but also by breaking the intergenerational transmission of poverty and reducing inequality of opportunity (Coady and Dizioli, 2018 ).

Different studies (Autor et al., 2005 ; Menezes-Filho et al., 2006 ) emphasized that higher education enhances productivity and allows individuals to earn higher incomes, thus reducing the gap between high and low earners (compression effect), as identified by Knight and Sabot ( 1983 ). On the other hand, higher education may worsen income inequality by creating a “skill-biased” technological change, where skilled workers expect a higher wage premium in the labor market, therefore, a greater concentration of income among the higher-skilled and educated individuals (composition effect) (Menezes-Filho et al., 2006 ). The interplay between these effects is complex. Abdullah et al. ( 2015 ) argued that while an initial increase in the number of educated workers might increase inequality (the composition effect), after reaching a certain threshold, the increased supply of skilled workers decreases the wage premium for higher-skill workers, thereby lowering income inequality (the compression effect). Their meta-regression analysis of 64 empirical studies reveals that education affects both tails of the income distribution: it reduces the income share of top earners and increases the share of bottom earners.

The impact of gender and higher education on wage variations has received a great deal of attention in the empirical literature. Women’s higher education leads to lower levels of income inequality or a decrease in the gender wage gap (Seneviratne, 2020 ). The increase in women’s education and the changes in the occupational structure would provide more significant opportunities for skilled women to enter professional jobs and higher-end female-dominated occupations (Harkness, 2010 ). This suggests that addressing wage inequality requires improving women’s education, addressing systemic biases, and promoting equal opportunities for career advancement (Bradley, 2000 ; Farkas et al., 1997 ). Fan and Sturman ( 2019 ) showed that there is a gender wage gap among newly graduated students with the same level of education although the share of women with higher education is greater than that of men in the study sample. Other studies focus on the gender wage gap for particular sectors. For example, Sridadia and Prihantonob ( 2020 ) applied the Mincer equation to measure the gender wage gap in Indonesia. Their results revealed that the gender wage gap is higher in the industrial sector as compared to the service sector. Interestingly, other studies found that the field of study has a significant impact on wage inequality, with those involved in numeracy (scientific) fields of education having higher wages compared to those involved in literacy fields of education (Bol and Heisig, 2021 ). This is explained by the fact that those with a scientific background have more skills compared to those with a literacy background, thus they have higher wages. This result is also confirmed elsewhere (e.g., Altonji et al., 2012 ; Kirkeboen et al., 2016 ).

It is worth noting that the impact of education on wage inequality depends on various factors, including government policies (Abdullah et al., 2015 ). While education subsidies can increase opportunities for poor children, public spending on education, particularly higher education, often disproportionately benefits middle- and upper-class families. This underscores the need for targeted policies to ensure that educational expansion benefits those most in need. This perspective aligns with the findings of Gregorio and Lee ( 2002 ), who reviewed empirical literature across countries using a panel data set from 1960 to 1990 at five-year intervals. Their results emphasized the strong impact of educational factors on income inequality, with higher educational attainments playing a more significant role in income distribution. Those findings illustrate that education plays an indispensable role in shaping wage distribution. Other factors affecting income inequality have also been considered in the empirical literature, such as socioeconomic and sociodemographic factors (e.g., Pattayat et al., 2023 ; Hovhannisyan et al., 2022 ; Wu et al., 2021 ). Moreover, wage distribution has a close association with many other factors, including political upheaval, policy decisions, economic stability, and technological progress (Coady and Dizioli, 2018 ). It is commonly argued that education inequality is positively correlated with income inequality; however, the impact of education might be positive or negative on income inequality depending on time and situation (Abdullah et al., 2011 ). Therefore, policies that reduce wage inequality must consider the multiple channels through which education affects income distribution and address the underlying structural and institutional factors contributing to inequality (d’Hombres et al., 2012 ; Ramadan et al., 2015 ).

Today, women worldwide experience significant barriers to labor force participation and struggle to access better employment opportunities. Unfortunately, the situation is not different in the occupied Palestinian territory. Women encounter numerous challenges that prevent them from reaching certain job positions in both the public and private sectors. Moreover, a research by Albotmeh and Irsheid ( 2013 ) suggested that women face disparities in working conditions, such as inadequate health and safety standards and job security, which in turn force them to work in the informal sector. These disparities also result in wage discrimination between men and women, even with the same qualifications and level of education. According to the International Labour Organization (ILO), the worldwide annual women’s labor participation rate was 45% in 2020, whereas in Palestine, it was about 18%. The employment rate for women was 4% in Palestine, which is lower than the average global level of 6%. Women’s potential labor force rate was 5% globally and 21% in Palestine (ILO, 2016 ). Al Habeel et al. ( 2011 ) indicated that the Palestinian situation is unique because of the Israeli occupation, which significantly influenced gender roles and identity formation.

The Palestinian labor market confronts structural imbalances as it depends on job opportunities in Israel, which are generally restricted to men. This, in turn, may create disparities in local market opportunities for men and women (Khattab, 2002 ). Cultural differences regarding women’s skills also create obstacles to working in the industrial and service sectors (Hilal et al., 2008 ). Male workers dominate both the private and government sectors. The market generally favors hiring men over women, considering their reproductive roles in the household. There are more female graduates compared to male graduates, but there are still fewer employment opportunities for women. Women often face denial of employment due to cultural differences rather than qualifications. Fear of harassment also deters women from seeking jobs (Harkness, 2010 ). Recently, Daoud and Shanti ( 2016 ) emphasized that the government sector in the West Bank has experienced a slight improvement in women’s participation rates, but the participation rate in the private sector remains low. Furthermore, gender discrimination based on political opinions has also emerged in the public sector (Alkafri, 2011 ).

To the best of the researchers’ knowledge, there is extensive literature on wage inequality and education. However, no previous attempt has been made to assess the impact of women’s higher education on earnings and income inequality in Palestine. Moreover, previous studies relied only on the Mincer equation, the Gini index, or other methods. Therefore, this study aimed to investigate the impact of women’s higher education on wage inequality in Palestine using a mixed methodology of the Mincer earnings function and the Gini index. Namely, this study tries to answer the following questions: What is the impact of women’s higher education on wages? And What is the contribution of education to wage inequality? Based on the empirical evidence, women’s attainment of higher education is negatively associated with the gender wage gap. Accordingly, the study tested the following main hypothesis: (i) Women’s higher education in Palestine would reduce gender wage inequality, and that (ii) the contribution of higher education to total wage inequality is decreasing over time.

In this paper, the Mincer earnings function measured the rate of returns on education, while the Gini index measured the contribution of inequality in education (part of the inequality of opportunities) to the overall wage inequality. Total wage inequality has been decomposed using the Gini index to analyze the impact of higher education on reducing wage inequality over the years. It is noteworthy that this study utilized data from the Palestinian labor force survey for the period 2010–2020. The Mincer earnings function is a single-equation model that explains wage income as a function of schooling and labor market experience (Mincer, 1974 ). The equation has been examined using different datasets from various countries (Martins and Pereira, 2004 ; Dakić and Savić, 2017 ). Typically, the logarithm of earnings is modeled with a list of explanatory variables, including educational attainment and experience (Waseema, 2022 ; Gregorio and Lee, 2002 ; Martins and Pereira, 2004 ). The Mincer equation has undoubtedly contributed to the advancement of labor and educational economics. It helps understanding the factors affecting wages, the rate of return on education, enrollment in education, the effects of wage discrimination, and the value of on-the-job training and labor market experience (Martins and Pereira, 2004 ). The Gini index has been widely used to measure income inequality (Trapeznikova, 2019 ). Furthermore, many studies have used the decomposed Gini index to measure the different sources of inequality contributing to overall income inequality (Ramadan et al., 2015 ). Wagstaff et al. ( 2003 ) provide a decomposition of the concentration index (the bivariate version of the Gini index) based on regression analysis applied to health data in Vietnam. This approach computes the share of inequality of each cofactor to the overall inequality of the dependent variable. The method has been widely applied in empirical research to measure inequalities in health (e.g., Doroh et al., 2015 ; O’Donnell, 2012 ) as well as income inequalities (e.g., Devkota et al., 2017 ; Zhong, 2011 ).

The remainder of this article is structured as follows. Section two discusses the methods including the data used and the analytical approach. Section three provids descriptive statistics of the data used, the analysis of wage determinants, and the decomposition of wage inequality. Section four displays the main results, while Section five concludes and provides some limitations and policy implications.

We used the Palestinian Labor Force Surveys (LFS), conducted by the Palestinian Central Bureau of Statistics (PCBS) on an annual basis from 2010 to 2020. The LFS covers the two main Palestinian regions (the West Bank and the Gaza Strip), and it includes individuals 10 years of age or older who are out of the labor force, unemployed, or employed in any economic sector. The datasets are harmonized for all years, that is the bulk of the questions as well as the structure of each question are similar in all LFS series. The LFS also provides data on demographic characteristics, such as gender, age, level of education, marital status, locality (place of residence: rural, urban and refugee camps), and region (West Bank and Gaza Strip). The survey also includes a question about the employment type which is composed of four categories: employer, self-employed, wage employee, or unpaid family member. For the current study, we choose a sub-sample focusing on wage employees only which forms about 65% to 70% of total employed individuals. We first estimate the wage equation based on (Mincer, 1974 ) as follows

where \(w\) is the average daily wage obtained by each individual; \(d\) is the set of binary education variables (schooling, high education, and higher education), the level of experience is proxied by the age of the individual, and \(y\) is the set of other explanatory variables. The level of education is the main cofactor in the model which is a represented in three binary variables: (i) School: if the highest level of education obtained by each individual is secondary school; (ii) high education: if the highest level of education is diploma or bachelor, and (iii) higher education: if the highest level of education is masters or PhD. Other variables include gender; locality type (whether living in urban, rural or refugee camps), and marital status (whether married or not). Equation 1 is estimated using the ordinary least square method. It is worth noting that the Mincer equation is one of the most widely used approaches in the empirical evidence that captures the impact of schooling and experience as mentioned at the outset. Thus, it is suitable for the estimation of the effect of women’s higher education on wage differences in Palestine.

Then, total inequality in wages is measured using the Gini index. Furthermore, the contribution of each factor to overall wage inequality is measured using the decomposed Gini index built based on regression analysis (Eq. 1 ). Inequality in wages due to variation in education is referred to as legitimate inequality. Wage inequality due to all other variables—classified as variables beyond individuals’ control—is referred to as illegitimate inequality. The decomposed Gini index of wages can be written as follows (Wagstaff et al., 2003 ):

where \(G\left(w\right)\) is the Gini index of wages measuring the overall inequality in the variable; \(G\left({d}_{k}\right)\) is inequality in the education variables/categories ( \({d}_{k},{k}=\mathrm{1,2}\) and \(3\) ); \(G\left({{age}}_{m}\right)\) is the inequality in experience (age); \(G\left({y}_{j}\right)\) is inequality in other contributing factors \({y}_{j}\) ( \(k=1,\ldots ,J\) ); \({\mu }_{\varepsilon }\) is the mean value of error; \({\mu }_{w}\) is the mean value of wages, and \(G\left(\varepsilon \right)\) is inequality in the error term (unexplained inequality). The contribution of education to overall inequality in wages is calculated as \(\mathop{\sum }\nolimits_{k=1}^{3}{\alpha }_{k}G\left({d}_{k}\right)\) where \({\alpha }_{k}={\beta }_{k}{\mu }_{k}/{\mu }_{w}\) ( \({\mu }_{k}\) is the mean value of \({d}_{k}\) ). Similarly, the contribution of each other explanatory variable \({y}_{j}\) to overall wage inequality is \({\alpha }_{j}G\left({y}_{j}\right)\) where \({\alpha }_{j}={\gamma }_{j}{\mu }_{j}/{\mu }_{j}\) ( \({\mu }_{j}\) is the mean value of \({y}_{j}\) ). The Gini index is the commonly-used measure of income inequality which is easily measurable and decomposable based on regression analysis. The decomposition of the Gini index shows which cofactor is more important than others in terms of its contribution to overall wage inequalities.

This section summarizes main data regarding wages across gender and education groups. Then it provides the main results of the regression analysis and the decomposed Gini index.

Descriptive analysis

Table 1 provides data on the average daily wage—measured in New Israeli Shekel (ILS) – based on gender and level of education. The table also shows the gender wage gap—a widely recognized occurrence that describes the disparity in average earnings between men and women in the workforce. Typically, it is measured as the percentage difference between the average hourly or daily wage of men and women, relative to men’s earnings. Two main observations are worth highlighting. First, the average daily wage for men is higher than that of women for all levels of education across all the years. Secondly, the average daily wage is increasing with the level of education for both men and women. For example, in 2010 the average daily wage was 48.79 ILS for women and 60.72 ILS for men with school education resulting in a wage gap of 19.64%. The gender wage gap has increased to 42.41% for those having only a school education. Regarding men and women with high education, the wage gap has decreased from 21.96% in 2010 to 16.27% in 2020 which is still relatively high. As for the higher education group, generally, the wage gap slightly decreased during the period 2011–2019 from 20.21% to 19.88%. It’s important to note that the wage gap in higher education is exceptional because, in 2010 and 2020, men’s wage was 5.97% and 4.67% respectively lower than women’s wages.

Table 2 explains the percentage of male and female employment status. It shows that the percentage of employed males decreased by 3.52% points in 2020 as compared to 2010. However, the unemployment rate remained at 12% with little variation throughout the years. Also, the share of men who are out of the labour force is stable (46.37% in 2010 as compared to 46.58% in 2020). However, the share of women who are out of the labour force has slightly decreased from 87.4% in 2010 to 86.4% in 2020. On the other hand, the unemployment rate among women has increased from 3.13% in 2010 to 5.29% in 2020.

Results presented in Table 3 shows that the male unemployment rate and employment rate negligibly changed from 2010. However, the unemployment rate among females has increased over time reaching almost 39% in 2020 as compared to 24.85% in 2010.

Wage determinants

The results of this section and subsequent section are provided for 2010, 2015, and 2020. Detailed results are available upon request. Table 4 presents the determinants of wages in Palestine for the years 2010, 2015, and 2020. The results indicate that males generally have higher wages than females, with a decreasing wage gap between 2015 and 2020. In 2020, males earned 23.3% higher than females in terms of average wage, compared to 29.8% in 2010 holding other factors constant. Age was found to have an inverted U shaped effect on wages. However, this effect has decreased in 2020 as compared to 2015. Additionally, being married was found to have a positive effect on wages with married individuals having higher wages of 8.3% in 2010 as compared to non-married individuals. This wage difference has decreased to 5.5% and 3.5% in 2015 and 2020, respectively. Finally, results showed that individuals living in rural areas have higher wages than those living in urban areas. Those living in rural and urban areas have higher wages than those living in refugee camps (50.8% and 14.2% respectively).

Regarding the education variable, individuals with higher education earn significantly more than those with lower levels of education. Specifically, individual with higher education earn wages that is 112.5% Footnote 1 higher than those with high education and 176.7% with only school education in 2010 as shown in Table 4 . In 2020, these two differences have been decreased to 92.1% and 116.3%, respectively. Regarding the difference in wage between individuals with high education and school education, results in Table 4 show that the difference has decreased from 64.2% in 2010 to 24.2% in 2020. Although the wage gap still exists, these results indicate that the wage gap has been decreasing between all education groups.

Decomposition of inequality

According to Table 5 , the overall level of education wage inequality has increased from 32.2% in 2010 to 39.3% in 2020. Regarding the decomposition of the Gini index of wages in Palestine in 2020, the contribution of education as the main factor in the analysis is 29% of which 4.6% are due to differences in higher education. The overall contribution of education to wage inequality has decreased from 37.3% in 2010 to 29.0% in 2020. Moreover, the contribution of the variance in higher education has decreased from 9.4% to 4.6% for the same period. As for school education, the share of its inequalities to overall wage inequality was 18.9% in 2010 and decreased to 13% in 2020. Whereas the inequality of high education is responsible for 11.4% of total inequality in 2020. This share has decreased over years from 18.9% in 2010 to 17.2% in 2015. This means that the legitimate inequality due to differences in education is relatively high but decreasing over time. Gender inequalities explain 7.8% of total inequality of wages in 2020, compared to 12% in 2010, and 2015. The locality factors contribute to 30.0% to total wage inequality in 2020 which has tripled as compared to 2010 (11.7%).

This study investigates the role of women’s higher education in reducing wage inequality in the Palestinian territory. We used the LFS conducted between 2010 and 2020 to estimate wage determinants as well as wage inequality, where gender and level of education were the main cofactors. Further, total wage inequality has been decomposed using the standard Gini index to explore the contribution of higher education to total inequality. Many results of this research are worth highlighting. First, results show that males still have higher wages as compared to females but the wage gap has decreased over the period under consideration (2010–2020). Second, education remains a significant factor in determining wages across time, with higher levels of education leading to higher wages. However, the magnitude of the effect decreases over time, particularly for those with higher education (master’s or PhD degrees). These two results can be explained by the fact that the percentage of educated women has increased over time. For example, the percentage of women with high and higher education has increased from 13.55% in 2010 to 23.25% in 2020. This could also be explained by the extensive work on bridging the gender gap policies or societal attitudes towards gender equality over time. It is evident from the Palestinian government work especially the Ministry of Women’s Affairs in collaboration with UNESCO who worked together to improve 97 policies on gender equality and women’s empowerment during the period of 2011–2017 (Hirsh et al., 2020 ). Further, job opportunities in Palestine have been relatively enhanced for skilled women, i.e., women with higher levels of education. This in line with the results of Hillis et al. ( 2018 ) who found a statistically significant impact of master’s and PhD degrees on the gender wage gap in Palestine by using the ordinary least square method. They showed that Skilled women are often found in specific occupations and sectors more than skilled men. In 2013, only 2.9% of full-time workers in medium-sized private enterprises were women. In 2015, 48% of skilled women worked as teaching professionals, compared to 15.2% of skilled men. The education sector employed 55% of skilled women in 2015. Although the gap has been decreased over time, the gender wage gap still an issue in the Palestinian context. This might be because women are overrepresented in lower-paying fields and underrepresented in higher-paying sectors. This concentration of women in certain occupations limits their access to higher-paying jobs and reduces their potential for upward mobility (Morrar, 2022 ; Loewenthal and Miaari, 2020 ; Calì and Miaari, 2018 ; ILO, 2016 ).

Third, another important result is related to the impact of locality type on wages. Results show that individuals in rural areas have higher wages as compared to individuals living in urban areas and refugee camps. This might not be a surprising result in the Palestinian context because many Palestinian “men” living in rural areas choose to work either in urban areas or in Israel where wages are significantly higher. Fourth, the overall wage inequality has increased over time from 32.2% in 2010 to 39.3% in 2020. Interestingly, the part of inequality due to gender differences or education differences has been decreasing over time. This implies that despite their importance in interpreting wage inequality, education and gender differences are not the main determinants of inequality. Other important factors that contribute to wage inequality with increasing share over time include the locality type which has been previously demonstrated. Moreover, some sensitivity analysis (available upon reasonable request) shows that the shares of gender and education to overall inequality are similar to the results obtained in Table 5 . This validates our conclusions regarding the decreasing effect of both variables on wage inequality and confirms our hypothesis regarding the impact of women’s higher education on wage inequalities. Another important result regarding the contribution of education to overall wage inequality is related to the contribution of each level of schooling to total inequality. As shown in the previous section, in general, the contribution of higher education to total wage inequality is lower than the contribution of other levels of education for all years. This might reflect the higher wage gap among individuals with low levels of education.

The Mincer earnings function was used to measure the rate of returns on education, while the Gini index measured the contribution of inequality in education (part of the inequality of opportunities) to the overall wage inequality. Results showed that there is a persisting but decreasing gender pay gap over time, however male wages have consistently been higher than those of female at all levels of education. Moreover, the contribution of higher education to overall inequality is smaller than the contribution of other levels of education (high and school education) for all years. Therefore, addressing this inequality requires a concerted effort from policymakers, employers, and society as a whole to create a more equitable workplace and to invest in higher education, particularly for marginalized women. This also requires the promotion and enforcement of gender equality in the workplace, and the enhancement of social protection system in the labour market. Promotion of gender diversity in leadership can also create a more inclusive work environment. At the educational level, it is important to adopt and advocate policies and action plans (develop and support educational programs, mentorship and career development, etc.) which can bridge the skills gap and reducing gender disparities in sectors that traditionally dominated by men and to help women to advance in their careers and achieve higher-paying positions.

Empirical evidence demonstrated that developing countries investing in women’s education, thus increasing their empowerment in the labor market, are likely to witness an increase in economic growth over time. This has important implications for countries where income inequality and human capital levels are often low. Policymakers should focus on the provision of quality education for women to help them secure high-paying jobs like men, resulting in a reduction in wage inequality. This evidence supports the efforts of the Palestinian Authority regarding the national employment strategy (NES). The main goal of the NES is to enhance the strategic development of the Palestinian labor market through different mechanisms, including promoting both women’s participation in the labor market and the education system in the country. This may require augmenting the government budget share allocated to the education sector. In addition, the government can provide funds or loans for female students to pursue higher education degrees either in the country or abroad. Creating more job opportunities in partnership with the private sector is another approach to enhance income equity.

Some limitations of the current study are worth stating. Generally, factors affecting wages are not limited to those presented in Table 4 . Other factors may include religion, traditions, ethnic background, age at marriage, occupational segregation, access to professions, ability, institutional discrimination, etc. The authors conducted some sensitivity analyses by adding and removing some variables, such as region and occupation. It is concluded that the results are robust. For example, the contribution of higher education to overall inequality in 2020 is about 4.6% under different specifications of Eq. 1 . However, information regarding other variables, such as age at marriage and access to professions, is absent from the LFS used in this study. Another limitation is related to the sample size of women with higher education. This might be a source of bias. As shown in Table 1 , the wage gap was negative in two periods. This is a misleading result since wages are higher for men. Overall, Future research may consider such types of limitations by developing new detailed qualitative indicators that could help provide an in-depth analysis of the missing variables that account for societal and other economic factors that may affect wage inequality in Palestine. In addition, further studies regarding women’s higher education should account for issues related to women’s opportunities, such as access to higher education, college challenges and experiences, family responsibilities, and job matching issues.

Data availability

The authors used data from the Palestinian Central Bureau of Statistics (PCBS) under license for this study and under the condition that they were not allowed to publish the raw data. However, the Palestinian Central Bureau of Statistics website, https://www.pcbs.gov.ps/pcbs_2012/PressEn.aspx , displays all the published reports for that data used, especially the labor market reports, including all labor force key indicators.

This percent has been calculated as the exponential of the difference between the coefficients of higher education and high education. Similar calculations have been done for the other education groups.

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Acknowledgements

This work has been completed thanks to the funding provided by the research committee at Birzeit University, the grant number is 60/2021.

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Najiba Morar

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Theoretical Framework: The two authors contributed equally to this section. Literature Review: The first author contributed 70%, and the second author contributed 30%. Data Analysis: The first author contributed 70%, and the second author contributed 30%. Writing: The two authors contributed equally to this section.

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Morar, N., Awawda, S. Does women’s higher education reduce wage inequality? Evidence from Palestine using repeated cross-sectional data. Humanit Soc Sci Commun 11 , 1133 (2024). https://doi.org/10.1057/s41599-024-03620-2

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DOI : https://doi.org/10.1057/s41599-024-03620-2

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​Income inequality: on the ILO’s World Employment and Social Outlook study

More jobs and higher taxes can counter the effects of automation .

Published - September 06, 2024 12:10 am IST

The ILO’s World Employment and Social Outlook study (September) has definitively linked declining trends in labour’s income share of total income within nations to technological advances — mainly automation and artificial intelligence. In an analysis of the past two decades, it mentions a 1.6% drop in the global labour income share between 2004-24. More ominously, almost 40% of this decline was in the pandemic years of 2019-22 — a drop that has not been recouped in the past couple of years. Labour income share is a measure widely used to assess income inequalities within economies. The 1.6% drop might seem insignificant, but it amounts to $2.4 trillion in lost wages at constant purchasing power parity, in relation to what workers would have earned had the labour income share been stable since 2004. $2.4 trillion lost globally is more than half of India’s nominal GDP forecast for FY2023-24. The study also highlights the gendered aspect of this inequality. In 2024, almost a third of the world’s young women (28.2%) are not in employment, education or training, it estimates, which is double that of young men (13.1%). This is alarming for developing nations with growing working age populations, as it highlights challenges in job creation. In fact, another ILO report on the status of employment in India estimates that 83% of its unemployed are youth. This coupled with the government’s recent prescriptions to the private sector to invest in labour intensive employment points to a crisis in jobs growth and rising inequality, even as output and labour productivity rise.

Several countries have been mooting the idea of a universal basic income (UBI), or a floor to stand on, as economists have called it. A referendum in Switzerland on UBI was defeated in 2016, while Democratic candidate and American tech investor Andrew Yang, in his aborted 2020 bid to the White House, mainstreamed a ‘Freedom Dividend’ of $1,000 a month for every American adult. Congress leader Rahul Gandhi too made a proposal of ₹12,000 a month for every family, during his 2019 election campaign, calling it a “final assault on poverty”. Several industry reports point to high-paying job creation due to automation and AI, to counter the jobless growth theory. But again, this only highlights an acceleration in income-inequality trends. Indeed, with the apparent advantages of automation and AI being irreversible, perhaps a global goal towards a universal basic income could address Sustainable Development Goal 10, or reduced inequality within and among countries. It is perhaps time that developing nations such as India consider the reintroduction of an inheritance tax as a measure to redress wealth inequality.

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labour / technology (general) / Artificial Intelligence / Coronavirus / personal income / India / employee benefits / employment / Rahul Gandhi / Switzerland / Sustainable Development Goals / taxes and duties

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Violence against Women in India

Understanding trends in the extent of violence against women can be helpful in challenging violence against women and gender inequality. In this paper, we compare the incidence of violence, as measured in the National Family Health Surveys, to the reporting of violence, as compiled by the National Crime Records Bureau. We also shed light on heterogeneity in incidence and reporting across India’s states. We find that violence against women is common, that most violence against women is not reported to the police, that violence by husbands is less likely to be reported than violence by others, and that the reporting of violence has not improved over the last decade and a half. These concerning findings highlight the urgent need for social and legal interventions to reduce violence against women, and to improve its reporting.

The authors would like to thank Vipul Paikra for helpful research assistance. 

Sexual and physical violence against women is one of the clearest and most detrimental manifestations of gender inequa lity. The United Nations Sustainable Development Goals aim at “eliminating violence against women and girls” (UNWomen 2022). And violence against women remains one of the core concerns of movements against patriarchy in India and globally (Kannabiran and Menon 2007). Despite this recogn ition, public discussions on violence against women in India are c onstrained by the lack of reliable information on the magnitude of violence against women, the extent to which cases are reported to the police, or trends in incidence and reporting (Bhattacharya 2013; Gupta 2014; Rukmini 2021). 

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