The IMF Staff Discussion Note explores the causes and consequences of income inequality globally. It highlights that income inequality has increased in many advanced and emerging market economies (EMDCs), with significant disparities in access to education, health care, and finance. The paper argues that income inequality matters for growth, as the income share of the poor and middle class is crucial for economic growth. It finds that an increase in the income share of the bottom 20 percent is associated with higher GDP growth, while an increase in the income share of the top 20 percent is linked to lower growth. The paper also investigates the drivers of inequality, finding that technological progress, financial globalization, and trade openness have contributed to rising inequality. It suggests that policies focused on the poor and middle class can help reduce inequality, with different approaches needed for advanced economies and EMDCs. The paper emphasizes the importance of addressing inequality to ensure inclusive growth and social stability.The IMF Staff Discussion Note explores the causes and consequences of income inequality globally. It highlights that income inequality has increased in many advanced and emerging market economies (EMDCs), with significant disparities in access to education, health care, and finance. The paper argues that income inequality matters for growth, as the income share of the poor and middle class is crucial for economic growth. It finds that an increase in the income share of the bottom 20 percent is associated with higher GDP growth, while an increase in the income share of the top 20 percent is linked to lower growth. The paper also investigates the drivers of inequality, finding that technological progress, financial globalization, and trade openness have contributed to rising inequality. It suggests that policies focused on the poor and middle class can help reduce inequality, with different approaches needed for advanced economies and EMDCs. The paper emphasizes the importance of addressing inequality to ensure inclusive growth and social stability.