Inequality in the Digital Era

The digital revolution is transforming economies. Potential economic gains from digital technologies are enormous, but with new opportunities come new challenges. Within economies, income and wealth inequalities have risen as digitization has reshaped markets and the world of business and work. Inequalities have increased between firms and between workers. The distribution of both capital and labor income has become more unequal, and income has shifted from labor to capital. Technological change, however, is not the sole reason for the rising inequalities. Policy failures have been an important part of the story. Policies will need to be more responsive to the new dynamics of the digital economy to achieve outcomes that are more inclusive.