Income inequality is the extent to which income is distributed unevenly in a country. It’s an important companion statistic to income per capita, which measures how much income a country has, but not how this income is distributed. Income inequality within a country is often masked by the national average.
High inequality raises two questions. First, what is the impact on the economic well-being of a country? The answer is that high inequality can diminish economic growth if it means that the country is not fully using the skills and capabilities of all its citizens or if it undermines social cohesion, leading to increased social tensions. Second, high inequality raises a moral question about fairness and social justice.
There is, however, no consensus on when income inequality reaches this tipping point.