Towards Bridging the Gap: Strategies to Combat Inequality

Inequality is not an accident. Across the world, the United Nations’ Sustainable Development Goal 10 frames reducing inequality – both within and between countries – as a fundamental challenge of our time. From widening income gaps to unequal access to education and healthcare, the effects of inequality ripple through every part of society. But what gives researchers and policymakers a measure of cautious optimism is that inequality is, in large part, a product of policy choices. That means it can also be reversed by better ones. This post looks at the key strategies that evidence points to as effective tools in the fight against inequality.

Understanding the scale of the problem 🔗

Before discussing solutions, the numbers deserve attention. According to the World Bank’s 2024 Poverty, Prosperity and Planet Report, nearly 700 million people still live in extreme poverty on less than $2.15 a day, and around one-fifth of the global population lives in countries with high inequality. High inequality, the report notes, reflects a lack of opportunities for socioeconomic mobility, which in turn slows down inclusive growth. In 2024, the global labour income share in GDP fell to 52.3 percent, down from 52.9 percent in 2015 – a loss of $255 per worker on average that hits lower-income workers hardest.

These are not just statistics about economic distribution. The OECD has observed that persistent inequality, especially in economic opportunities, may partly explain the surge in political polarisation and populism seen in many countries. Inequality erodes social cohesion. Addressing it is not only a moral imperative – it’s a condition for stable, functioning societies.

Promoting shared prosperity 🔗

One of the most widely endorsed frameworks for tackling inequality is the concept of shared prosperity – the idea that economic growth should be measured not just by averages, but by how it benefits the most vulnerable. The World Bank’s Global Prosperity Gap, introduced as a new indicator of shared prosperity, specifically tracks how far a society is from a threshold of $25 per person per day, giving greater weight to the incomes of the poorest members of society. The indicator decreases – meaning welfare improves – when average incomes rise and even faster when the incomes of the poor grow more rapidly.

This framework has practical implications for policy. Countries like Ethiopia, Cambodia, and Peru have demonstrated notable success in shared prosperity during certain periods, with income growth rates for their bottom 40 percent exceeding national averages. Peru’s progress, for instance, stemmed from a combination of macroeconomic stability, expanded social programs, and growth in labor-intensive sectors that created employment for lower-skilled workers. These examples show that reducing inequality requires coordinated, multifaceted strategies – not a single magic policy.

Progressive taxation as a redistribution tool 🔗

Fiscal policy is central to any serious strategy for shared prosperity. A 2024 UN Department of Economic and Social Affairs report emphasises that tax policy is crucial to addressing inequality, particularly through progressive taxation of high incomes and wealth. Well-designed wealth taxes can generate substantial revenue to fund public services while containing the rise of extreme wealth concentration. Yet, as the same report notes, tax rates on wealth have generally declined across the world over the past decades, even as wealth inequality has worsened. Reversing this trend – and ensuring, as the UN Secretary-General has put it, that everyone pays their fair share – is one of the more direct levers available to governments.

Equity-based education policies 🔗

Education is consistently identified as one of the most powerful long-term tools for reducing inequality. But access to schooling alone isn’t sufficient – what matters is equitable access to quality education. The OECD’s landmark report Equity in Education: Breaking Down Barriers to Social Mobility defines equity in education as ensuring that differences in students’ outcomes are not determined by their socioeconomic background or circumstances beyond their control. The report finds that across OECD countries, disadvantaged 15-year-olds who perform well academically are significantly more likely to complete university and secure skilled employment – meaning that reducing educational gaps during compulsory schooling directly increases upward mobility.

Funding schools based on need, not wealth 🔗

A persistent driver of educational inequality is how schools are funded. In many systems, wealthier districts spend far more per student than poorer ones, compounding disadvantage. Research from the Othering & Belonging Institute at UC Berkeley argues that disrupting educational inequity requires distributing sufficient resources based on student need – with significant funding directed to schools with high concentrations of low-income and marginalised students. This is not just about fairness; the Learning Policy Institute notes that when states invest in equitable and adequate school resources, achievement gaps narrow and graduation rates rise for all students – improving state and national economies in the process.

Early childhood investment 🔗

The returns on early education investment are particularly strong. Research reviewed by the Learning Policy Institute shows that high-quality pre-kindergarten programs generate between $2 and $17 for every dollar invested, with the greatest returns apparent as children are followed further into adulthood. Expanding access to quality early childhood education – particularly for children from low-income families – is one of the highest-return interventions available to governments serious about breaking intergenerational cycles of poverty.

Internationally, UNESCO’s Education for All framework and the Incheon Declaration of 2015 have set the direction: universal access to quality education, with a focus on marginalised groups. SDG 4 reinforces this by calling for lifelong learning opportunities and the reduction of educational disparities. These aren’t aspirational goals disconnected from policy – they represent a growing international consensus that equity in education is foundational to inclusive growth.

Universal access to social services 🔗

Education reforms cannot work in isolation. For people facing poverty and inequality, access to healthcare, housing, and social protection is equally critical. Social insurance programs – covering necessities like safe housing, adequate food, and healthcare – promote economic stability by helping families weather setbacks without falling into long-term deprivation. But where these programs are fragmented, underfunded, or geographically uneven, they fail the people who need them most.

Healthcare access and its link to inequality 🔗

The connection between healthcare access and inequality is direct. The World Health Organization has emphasised that health and employment are inextricably linked, and that health inequities tied to employment can be reduced through safe, secure, and adequately compensated work. Universal healthcare systems remove a critical financial barrier that disproportionately affects low-income populations, preventing medical costs from pushing vulnerable households deeper into poverty. Countries and regions with robust social protection floors consistently show lower inequality – not because they are necessarily richer, but because they have made deliberate policy choices to ensure no one falls through the cracks.

Housing and basic infrastructure 🔗

Safe, affordable housing is another non-negotiable pillar of social equity. Singapore’s public housing program offers a widely studied example, with approximately 80 percent of residents living in high-quality public housing. This has contributed significantly to the country’s comparatively low inequality levels in the region. Policies that ensure affordable housing in opportunity-rich areas – rather than concentrating poverty in underfunded neighbourhoods – enable low-income families to access better schools, employment, and social networks.

Reforming labour markets 🔗

Even the most equitable education systems and social services will fall short if labour markets continue to generate deeply unequal outcomes. Labour market reform – covering wages, worker protections, and the balance of power between employers and employees – sits at the core of any serious inequality reduction strategy.

Raising minimum wages 🔗

One of the most direct policy tools is raising the minimum wage to a living wage. Research from UC Berkeley’s Haas Institute finds that higher wages for the lowest-paid workers have the potential to lift millions out of poverty and add significantly to national real income, without hurting overall employment or economic growth. Analysis by the Economic Policy Institute further shows that minimum wage increases also reduce racial pay inequality, with Black and Hispanic workers disproportionately benefiting from wage floor increases. Research spanning minimum wage changes from 1990 to 2019 found that such increases reduced Black-white wage gaps by 12 percent overall.

The Urban Institute adds that strong labour demand – supported by both fiscal and monetary policy – is crucial for creating job growth and improving wages broadly, particularly for workers who face structural discrimination. Collective bargaining rights and fair workweek policies, which give workers predictability and voice in their conditions, complement minimum wage reforms by ensuring that gains are sustained and not eroded over time.

Strengthening social protection for informal workers 🔗

In low- and middle-income countries, a large portion of the workforce operates in the informal economy, outside the reach of standard labour protections. The OECD’s Development Co-operation Report 2024 identifies programmes that expand social protection systems for informal workers as among the most effective ways to secure inclusive progress on global development goals. Combining labour market reform with expanded social protection creates a reinforcing cycle: better wages reduce the need for emergency social spending, while strong safety nets reduce the risk that workers accept exploitative conditions out of desperation.

The case for integrated, long-term thinking 🔗

What ties these strategies together is the recognition that inequality is a system-level problem requiring system-level responses. No single policy – not education reform alone, not a minimum wage increase alone – is sufficient. Well-designed policy packages, the OECD argues, can address these challenges simultaneously – boosting productivity while expanding equality of opportunity through coordinated action across education, labour markets, and social protection. Indonesia’s experience from the mid-1970s to mid-1990s is instructive: by combining rural development investments, education provision, and pro-poor spending with rapid economic transformation, the country achieved the rare outcome of falling inequality and falling poverty at the same time.

The OECD also stresses that to solidify gains in reducing inequality over the long term, policy goals must focus on continuously raising household incomes and expanding the middle class – not just lifting people above a poverty threshold. Inequality is not inevitable. It is a reflection of the choices societies make about who benefits from growth, who bears its costs, and who gets access to the resources needed to participate fully in economic and civic life.

What do you think? Given that inequality is ultimately shaped by policy choices, which of the strategies discussed here – equitable education funding, labour market reform, or universal social protection – do you think governments should prioritise first? And do you think economic growth on its own, without targeted redistribution, can ever meaningfully bridge inequality gaps?

References

1. https://sdgs.un.org/goals/goal10
2. https://www.worldbank.org/en/publication/poverty-prosperity-and-planet
3. https://www.oecd.org/content/dam/oecd/en/publications/reports/2024/09/policy-approaches-to-reduce-inequalities-while-boosting-productivity-growth_bf9b2e9d/af121c8f-en.pdf
4. https://blogs.worldbank.org/en/opendata/global-prosperity-gap–the-world-bank-s-new-measure-for-shared-p
5. https://socio.health/population-and-development-issues-challenges/reducing-inequality-strategies-solutions/
6. https://desapublications.un.org/file/20907/download
7. https://www.oecd.org/en/publications/equity-in-education_9789264073234-en.html
8. https://belonging.berkeley.edu/responding-educational-inequality-2
9. https://learningpolicyinstitute.org/blog/finishing-unfinished-dream-road-educational-equity
10. https://learningpolicyinstitute.org/product/advancing-education-2020-brief
11. https://thrivabilitymatters.org/equitable-access-to-education/
12. https://equitablegrowth.org/u-s-social-insurance-programs-support-workers-and-economic-growth/
13. https://www.apha.org/policy-and-advocacy/public-health-policy-briefs/policy-database/2023/01/18/decent-work-for-all
14. https://belonging.berkeley.edu/six-policies-reduce-economic-inequality
15. https://www.epi.org/publication/raising-the-federal-minimum-wage-to-15-by-2025-would-lift-the-pay-of-32-million-workers/
16. https://www.urban.org/research/publication/labor-market-policies-racial-equity
17. https://www.oecd.org/en/publications/development-co-operation-report-2024_357b63f7-en/full-report/proven-policies-that-end-extreme-poverty-and-reduce-inequalities_17f6221c.html