Inequality, Income distribution, Capital, Labour

D31, D33, E24, I38

After much empirical documentation of patterns of inequality, we address in this paper the need for a convincing interpretation of the causes of inequality in advanced countries. We set the current debate in the context of the evolution of ideas on inequality, including the debate on Thomas Piketty’s book. We argue that four ‘engines of inequality’can be identified – the power of capital over labour, the rise of ‘oligarchs capitalism’, the individualisation of economic conditions, the retreat of politics – as key sources of today’s inequalities. Each of these mechanisms is examined on the basis on concepts and data, with a detailed consideration of the results from the current literature and of the empirical evidence available. A full analysis of the dynamics of inequality, an interpretation of its mechanisms and a set of policy proposals to reverse it are developed in our book “Explaining inequality” (Franzini and Pianta, 2015).