Inequalities of outcomes such as income and wealth and inequalities of opportunities go hand in hand, largely because higher inequality curbs social mobility and opportunities for the poor and people from disadvantaged backgrounds.
Income inequality varies considerably across the OECD countries. In 2016, the Gini coefficient ranged from around 0.25 in the Czech Republic, Slovak Republic and Slovenia to almost twice that value in Chile and Mexico ( 6.1). The Nordic and some central and continental European countries have the lowest inequality levels of disposable income, while inequality is high in South American countries, Turkey and the United States. Alternative indicators of income inequality suggest similar rankings. The gap between the average income of the richest 10% and the poorest 10% of the population was 9.3 to 1 on average across OECD countries in 2016. The gap ranged from 5.2 to 1 in the Czech Republic and Slovenia to almost four times larger in Chile and Mexico (20 to 1). Over the past three decades, the gap between the rich and poor has widened in the large majority of OECD countries. During that period, the Gini coefficient increased by three points to an OECD average level of 0.32.
Emerging economies have higher levels of income inequality than most OECD countries, particularly China and South Africa. Inequality also increased in many emerging economies, but there are encouraging signs of stabilisation in China and even declines in Brazil and several other Latin American countries.
Household wealth is much more unequally distributed than income. On average, households in the top 10% of the wealth distribution own more than half (52%) of all total household wealth, and as much as 79% in the United States ( 6.2). In comparison, the richest 10% of income earners get on average around a quarter (24%) of all cash income, ranging from 20% in the Slovak Republic to 36% in Chile. While wealth inequality is higher that income inequality in all countries reviewed, countries with lower income inequality levels are not necessarily those with low wealth concentration, as witnessed by the examples of Denmark, Germany and the Netherlands.
High and increasing levels of inequality of outcomes tend to be an obstacle to income and social mobility. It could take on average four to five generations for the offspring of a family in the bottom 10% of the income distribution to reach the average income ( 6.3). In low-inequality and high-mobility countries, such as the Nordic countries, it would take two to three generations – 50 to 100 years – for those born in low-income families to approach the mean income in their society. But in high-inequality and low-mobility countries, such as the emerging countries Brazil, Colombia and South Africa, this shift would take even nine generations or more, if these probabilities of earnings mobility are not to change. In Colombia, where persistence is the highest, it would take at least 300 years for the offspring of low-income families to reach the mean.
To tackle inequality and promote opportunities for all, countries should adopt a comprehensive policy package, centred around four main areas: promoting greater participation of women into the labour market; fostering employment opportunities and good quality jobs; strengthening quality education and skills development, and adaptation during the working life; and a better design of tax and benefits systems for efficient redistribution. The OECD’s Inclusive Growth Initiative outlines a comprehensive approach to tackling inequality in all dimensions and promoting higher living standards.
