Abstract

Chapter 3 discusses the causes, patterns and dynamics of inequalities in an exhaustive review of the literature on inequality of income, expenditure and wealth among individuals and households. It emphasizes how these inequalities reflect and affect inequality along various dimensions, including political freedom, economic opportunity, health, education and social outcomes. It gives three sets of policy recommendations for different populations: policies to improve the conditions among the poor, the vulnerable and the socially excluded; policies geared towards supporting the growth and sustainability of a strong middle class; and policies that seek to curb concentration of income and wealth at the top. Some of these policy recommendations are quite consistent with what has often been proposed for the past three decades, which is that redistributive policies or welfare at the bottom should benefit the least well-off and address inequality.