Modern inequalities: a review of the literature

Abstract

This article reviews the main results of recent empirical research on the topic of income and wealth inequalities, with a special focus on Bulgaria, taking extensive account of the impact of Covid-19 which, according to the data, is responsible for ‘the largest annual increase in global inequality and poverty since at least 1990’. It is clear that social and macroeconomic shocks have a major impact on trends in inequalities. The aim of the article is to summarise the latest research on the subject in order to establish a starting point for the formulation of an adequate economic policy by national governments. The goal of such a policy should be to reduce inequalities to levels in socially acceptable ways which, on the one hand, would lead to an increase in general economic well-being and, on the other, also to an increase in social justice. Reducing the gap between rich and poor to ensure a fairer and more sustainable future means using all the tools of economic policy, both monetary and fiscal, which are available. A literature review such as this one fits precisely into this debate and would greatly assist future policymakers determine policies that work.