Policymakers are concerned not only with achieving rapid economic growth but also with how the fruits of growth are distributed across the population. The most commonly used measure of inequality, the Gini coefficient, is based on a comparison of each individual with every other individual in the population being studied. In the case of earnings, a Gini value of zero indicates perfect equality— each person has identical earnings— and a value of one indicates perfect inequality—all earnings in the economy go to one person.
Suggested citation: “Earnings Inequality,” Federal Reserve Bank of Cleveland, Economic Trends, no. 98-11, pp. 14-15, 11.01.1998.