This report revisits the theoretical concepts of inequalities including their measurements, analyzes their global trends, presents the policy makers’ perception of inequalities in 15 countries and identifies various policy options in combating this major development challenge of our time.

The report makes the basic point that in spite of the impressive progress humanity has made on many fronts over the decades, it still remains deeply divided. In that context, it is intended to help development actors, citizens, and policy makers contribute to global dialogues and initiate conversations in their own countries about the drivers and extent of inequalities, their impact, and the ways in which they can be curbed.

This report was prepared by the Poverty Practice in the Bureau for Development Policy, UNDP.

Key messages

• On average—and taking into account population size—income inequality increased by 11 percent in developing countries between 1990 and 2010.
• A significant majority of households in developing countries—more than 75 percent of the population—are living today in societies where income is more unequally distributed than it was in the 1990s.
• Evidence shows that, beyond a certain threshold, inequality harms growth and poverty reduction, the quality of relations in the public and political spheres of life and individuals’ sense of fulfilment and self-worth.
• There is nothing inevitable about growing income inequality; several countries managed to contain or reduce income inequality while achieving strong growth performance.
• Evidence shows that greater income inequality between households is systematically associated with greater inequality in non-income outcomes.
• Inequality cannot be effectively confronted unless the inextricable links between inequality of outcomes and inequality of opportunities are taken into account.
• In a global survey conducted in preparation for this report, policy makers from around the world acknowledged that inequality in their countries is generally high and potentially a threat to long-term social and economic development.
• Redistribution remains very important to inequality reduction; however, a shift is needed towards more inclusive growth patterns in order to sustainably reduce inequality.
• Reducing inequality requires addressing inequality-reproducing cultural norms and strengthening the political agency of disadvantaged groups.
• Evidence from developing countries shows that children in the lowest wealth quintile are still up to three times more likely to die before their fifth birthday than children in the richest quintiles.
• Social protection has been significantly extended globally, yet persons with disabilities are up to five times more likely than average to incur catastrophic health expenditures.
• Despite overall declines in maternal mortality in the majority of developing countries, women in rural areas are still up to three times more likely to die while giving birth than women living in urban centers.