The richest 1 percent of Americans own more wealth than the bottom 90 percent combined. That statistic, from the Federal Reserve, captures income inequality: the unequal distribution of income across a population. It is measured with tools like the Gini coefficient, which ranges from 0 (everyone earns the same) to 1 (one person earns everything).

Inequality has risen in most developed countries since the 1980s. Globalization, technological change, and declining union membership are common explanations. So are tax policy and corporate governance. The debate is not about whether inequality exists, but about whether it is a problem and what to do about it. Some argue that inequality reflects differences in skill and effort, and that taxing it heavily discourages growth. Others argue that extreme inequality undermines democracy, health, and social mobility.

The evidence is mixed. Some inequality seems necessary to reward innovation and hard work. Too much can be corrosive. Countries with lower inequality tend to have higher social mobility, meaning poor children are more likely to become rich adults. The opposite is also true. In highly unequal societies, advantages concentrate and the ladder gets pulled up.

Common measures

• Gini coefficient
• Top 1 percent income share
• Palma ratio (top 10 percent vs. bottom 40 percent)
• Intergenerational earnings elasticity
• Poverty rates