Income inequality

Social exclusion can lead to and result from disparities in income distribution, with the wealthiest segments of a country’s population receiving the greatest proportion of its national income. Income inequality arises from inequities in the distribution of assets such as land, credit and education.

Barron, M. (2008). Exclusion and Discrimination as Sources of Inter-Ethnic Inequality in Peru. Economia, 31(61), 51-80.
What impact do discrimination and exclusion have on income inequality between indigenous and non-indigenous workers in Peru? What policies could help to reduce this inter-ethnic inequality? This paper assesses the extent to which exclusion and discrimination contribute to inter-ethnic income inequality in Peru. It finds that exclusion plays a greater role than discrimination in contributing to Peru’s inter-ethnic inequality.
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The inequalities that arise from social exclusion are self-reinforcing. Recent research has demonstrated how income inequalities persist because of two ‘inequality traps’, which relate to human capabilities and access to capital.

Stewart, F. (2009). Horizontal Inequality: Two Types of Trap. Journal of Human Development and Capabilities, 10(3), 315-340.
Why do group inequalities often persist over the long term, and how can they be addressed? Group membership matters because wellbeing is affected both by individual circumstances and how well the group is doing. Strong complementarities among (1) capabilities and (2) capitals explain persistent group inequality. Multiple deprivations in capabilities and assets prevent catch-up without special interventions. Addressing HIs therefore requires governments to go beyond eliminating current, formal discrimination: the weak asset and capabilities base arising from past discrimination must also be tackled. As social and cultural capital inequalities cannot be eliminated by policy, strong affirmative action in other areas such as education and employment is justified.
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