Inequality is a new subject to acquire top priority in the G7 agenda, but it is now at the forefront of the political debate. Its causes, trends and political consequences are discussed daily by the media and have become a popular topic in economic research as well. Let me first state one fact that is too easily forgotten.
Globalization has been an enormous driver of growth in emerging countries, including in the two largest countries in the world. It has thus reduced overall world inequality. It has lifted millions, indeed hundreds of millions, out of poverty. At the same time, inequalities within countries have increased. This is most obvious in a number of emerging economies.