Microeconomics › Section O · Poverty and economic inequality › Topic O.5
Policies to reduce inequality
Economics cannot say how much inequality a society should accept, but it can lay out the tools for reducing it and what each one costs. The central question is whether greater equality must mean less output, or whether some policies deliver both.
In this topic
- How much inequality?
- Redistribution through taxes and spending
- Worked example: marginal and average rates
- The ladder of opportunity
- Merit and demerit goods
- Inheritance and the estate tax
- The trade-off: Okun's leaky bucket
- Worked example: is the transfer worth it?
- Is the trade-off always steep?
- Choosing policies wisely
- Common mistakes to avoid
- Key takeaways
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