Income inequality

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Uneven distribution of the pie.

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Income inequality in economics is the unequal distribution of income among individuals, households, groups, or populations. Income inequality can be measured within a country or across countries and regions, as well as within the global population.

Income varies for many reasons, including occupation, education, age, and hours worked, as well as broader economic and social factors. Income inequality can also be affected by government policies, including taxes and income-transfer programs. It is related to, but distinct from, wealth inequality, which measures differences in the value of assets people own rather than the income they receive.

Income inequality is substantial worldwide. In 2025, the top 10% of the world’s adults received 53% of global income, while the bottom 50% received 8%.

Income inequality can be measured within a country, compared between countries, or examined across the world’s population. One common approach is to divide a population into groups based on income, such as quintiles, which each represent 20% of the population, or percentiles, which each represent 1%. Researchers can then compare the share of total income received by each group.

Another widely used measure is the Gini coefficient, or Gini index, which summarizes income distribution on a scale from 0 to 1. A coefficient of 0 represents perfect equality, while 1 represents complete inequality. The higher the coefficient, the greater the income inequality.

Measurements can also differ according to how income is defined. For example, pretax income measures earnings and other income before taxes, while post-tax measures can account for the effects of taxes and government transfers. For that reason, inequality figures from different sources or countries may not always be directly comparable.

Differences in skill and motivation can contribute to income inequality, but there are also significant structural and cultural causes, such as segmented labor markets, discrimination, institutionalized racism and sexism, gender roles, and family responsibilities.

Other legal, political, and economic factors also affect income levels independently of individual characteristics. Examples include corporate power, degree of private versus public (or common) ownership and control of resources, collective-bargaining frameworks, and minimum-wage laws.—

Income inequalities can have different implications for levels of well-being in different countries, depending on whether other basic needs such as housing, health care, and food are largely market-based and whether people have access to productive resources such as land, water, and technology.

Within the United States, income is unevenly distributed. In 2024, the highest-income 20% of households received 52.2% of total household income, while the lowest-income 20% received 3.1%. The top 5% alone received 23.1% of total household income. The Gini coefficient, another measure of income inequality, was 0.488 in 2024. The calculation is based on money income, which measures income before taxes and excludes noncash benefits.

There are also sharp income disparities by race and sex. In 2024 median household income was $121,700 for Asian households, $92,530 for non-Hispanic white households, $70,950 for Hispanic households, and $56,020 for Black households. Among full-time workers who work year-round, women had median earnings of $57,520, compared with $71,090 for men, a difference commonly referred to as the gender wage gap.

A principal cause of rising income inequality in the United States has been the erosion of wages for less-educated workers, along with tax policy that has disproportionately benefited the richest households. This decline in real wages is linked to a number of factors, such as the loss of manufacturing jobs in the United States, the decline in the percentage of unionized jobs with benefits, the decline in the real value of the minimum wage, and the growth of service-sector jobs, many of which are low-paying.

The United States ranks among the world’s wealthiest and most developed countries based on measures such as gross domestic product (GDP) per capita and the United Nations’ Human Development Index. Yet income inequality remains high compared with other developed countries. For international comparisons, the OECD uses disposable household income, which accounts for taxes and transfers. On that basis, the U.S. Gini coefficient for disposable household income was 0.395 in 2022, compared with an OECD average of 0.316.

Global income inequality remains high, both within and between countries and regions. Although average incomes have risen substantially over the long term, the gains have been unevenly distributed. In 2025, average income in North America and Oceania was about 13 times that of sub-Saharan Africa and about three times the global average. Income is also unevenly distributed within every world region.

Income inequality is distinct from poverty: Poverty concerns the resources available to meet a particular standard of living, rather than how income is distributed across a population.

Wealth is even more concentrated than income. In 2025, the wealthiest 1% of the global population owned 37% of global wealth, while the bottom 50% owned just 2%. About 56,000 adults—the wealthiest 0.001%—owned more wealth than the entire bottom half of the world’s adult population. The scale of individual fortunes reached a new milestone in June 2026, when Elon Musk briefly became the first person with an estimated net worth of more than $1 trillion.