The engines of inequality

In Europe and in the United States, one of the legacies of the economic and financial crisis will no doubt be a high and particularly worrying level of economic inequality. Inequality has roots that go well beyond the 2008 collapse, but the stagnation that has followed it has made disparities in income and wealth more serious and more difficult to eradicate. In this article we suggest an interpretation of inequality that is parsimonious enough to identify the fundamental mechanisms at work, capable of accounting for its complexity and, at the same time, adequate for identifying appropriate policy measures. We begin with the basic facts on the rise of inequality in advanced countries.