Tax and benefit systems play a major role in reducing market-driven inequality, but have become less effective at redistributing income since the mid-1990s. The main reason lies on the benefits side: benefits levels fell in nearly all OECD countries, eligibility rules were tightened to contain spending on social protection, and transfers to the poorest failed to keep pace with earnings growth.
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As a result, the benefit system in most countries has become less effective in reducing inequalities over the past 15 years.
Source: oecd.org
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This report analyses the major underlying forces behind these developments:
– An Overview of Growing Income Inequalities in OECD Countries (free .pdf)
– Special Focus: Inequality in Emerging Economies (free .pdf)
– Part I. How Globalisation, Technological Change and Policies Affect Wage and Earnings Inequalities
– Part II. How Inequalities in Labour Earnings Lead to Inequalities in Household Disposable Income
– Part III. How the Roles of Tax and Transfer Systems Have Changed
Source: oecd.org
Read More @ Divided We Stand: Why Inequality Keeps Rising.
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Job Market Monitor 
I think one of the major contributors to the wage inequality is the ever-so highly touted- Globalization or Globalisation (for the UK crowd!) My opinion on globalization in a general sense is negative.
While it has provided benefits in the way of commerce across the globe, medical advances, etc.
It has also created the problem of outsourcing jobs and development. Not only human capital but in the process, some of the natural cycles and behaviors of advancement, which has affected all aspects of society.
No job or a less skilled job, typically can mean reduced chances for improvement. No to little improvement results in little or no incentive for advancement in education, which then stagnates a large portion of the workforce. Which then sends companies seeking to outsource even more and of course at reduced wages. How can we compete with third-world and impoverished nation workers making 1/3 to 3/4 less than an average household salary of 49K? We can’t, plain and simple. That part of globalization has helped to bring this nation to it’s economic knees, along with corrupt investment banks and politicians who have enabled the problems we face.
Posted by Econometrics Group | February 25, 2012, 5:23 pm