What factors have led to this increase in inequality in the UK?
The political system of the country you live in can affect its levels of inequality. Democracy, trade unions and the introduction of the minimum wage have all been found to decrease inequality.
Inequality is passed down from parents to children. In the UK, the impact of family income on a child's future income has increased over time. Today, 50% of a parent's pay advantage is passed onto their children in the UK compared to just 15-25% in Nordic countries.
Your experiences in childhood make a substantial difference to your pay as an adult. Test scores of 5-6 year olds are strongly linked with pay at 27, the likelihood of attending a university and the probability of owning a home. The standard of a child's education in primary and secondary school also affects their likelihood of attending university.
Global movement of labour and trade have led to an increase in inequality within developed countries. Immigration decreases wages of low paid people by a small amount (up to approximately £25 per year) and increases the pay of those already on high salaries, while trade liberalisation leads to an increase in foreign competition which decreases the wages of low-skilled workers.
Although technology advancement has in many ways made our lives easier, it has also altered the types of jobs available and the amount they pay. It has led to a decrease in the number of skilled trade jobs, pushing some people towards lower skilled, lower paid work and has caused an increase in professional and technical jobs (which tend to have higher wages). Technology also allows companies with few employees to make profits and therefore accrue very high incomes.