educational performance, obesity, and mental illness. A recent book,
Spirit Level, by Richard Wilkinson and Kate Pickett, has received
considerable attention for showing these relationships across time for a
large group of countries.
It is also argued that growing income inequality is harmful to democracy
because individuals with more income and wealth are often able to exert
undue influence on elected government officials, thus affecting policy and
economic outcomes in their favour. To the extent that democracy is
weakened in this manner, key economic and political institutions may
evolve to the point where they perpetuate and even worsen existing
income inequality.
Rising income inequality is also associated with reductions in social
mobility. It is one thing to have a highly unequal distribution of income
when it is relatively easy for low-income people to advance through their
efforts to achieve higher incomes. It is quite another, however, if such
mobility is very difficult. Current evidence suggests that in countries with
rising income inequality, intergenerational social mobility is declining. As
a result, the chances of a child growing up to be in a different income
group than his or her parents are falling. Children of poor parents tend to
grow up to be poor, whereas children of richer parents tend to grow up to
be richer. When social mobility is affected in this way, the inequality of
income tends to be self-perpetuating.
What Can Governments Do?