Drivers and consequences of income inequality

Abstract

There is little consensus amongst economists when it comes to income inequality. This study consists of examining the existing literature and empirical studies and answer the following question: “What are the most important drivers of income inequality and its consequences?” The most prominent literature in the field is analyzed, conclusions are made, and this paper can be a starting point of an empirical study. The findings of this paper suggest that the main drivers of inequality are differences in wages, technological development, wealth concentration, redistribution policies and deregulation of the financial sector.