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Understanding economic inequality

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4.2 Factors affecting the level and distribution of wages

Both the level and distribution of wages are an important contributor to the overall levels of income inequality in an economy.

Figure 16 Income inequality arises because labour and capital are compensated differently.

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This is an image of a man in a suit sitting on a pile of coins while construction workers work below him.

Figure 16 Income inequality arises because labour and capital are compensated differently.

Previous 4.1 Differences between individuals or households

Next 4.2.1 How income is shared between labour and capital

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4.2 Factors affecting the level and distribution of wages