The article reviews the relationship between inequality and economic growth, focusing on the impact of wealth inequality on growth dynamics and the effect of economic growth on wage inequality. It argues that wealth inequality can hinder growth, especially in imperfect capital markets and when agents are heterogeneous or face institutional barriers to investment. Wage inequality has risen significantly in the US and UK since the 1980s, primarily due to skill-biased technical change. The paper suggests that technical change is the main driver of wage inequality, as other factors like trade or organizational change are less explanatory without considering technical change. It also discusses the role of redistribution in growth, noting that while redistribution can enhance growth, it may not leave inequality unchanged. The paper challenges the traditional view that inequality is beneficial for growth, citing empirical evidence showing a negative correlation between inequality and growth. It also highlights the importance of capital market imperfections and moral hazard in affecting investment and growth. The analysis concludes that redistribution can be growth-enhancing by creating investment opportunities, especially in the absence of well-functioning capital markets. The paper emphasizes the need for sustained redistribution policies to address inequality and promote long-term growth.The article reviews the relationship between inequality and economic growth, focusing on the impact of wealth inequality on growth dynamics and the effect of economic growth on wage inequality. It argues that wealth inequality can hinder growth, especially in imperfect capital markets and when agents are heterogeneous or face institutional barriers to investment. Wage inequality has risen significantly in the US and UK since the 1980s, primarily due to skill-biased technical change. The paper suggests that technical change is the main driver of wage inequality, as other factors like trade or organizational change are less explanatory without considering technical change. It also discusses the role of redistribution in growth, noting that while redistribution can enhance growth, it may not leave inequality unchanged. The paper challenges the traditional view that inequality is beneficial for growth, citing empirical evidence showing a negative correlation between inequality and growth. It also highlights the importance of capital market imperfections and moral hazard in affecting investment and growth. The analysis concludes that redistribution can be growth-enhancing by creating investment opportunities, especially in the absence of well-functioning capital markets. The paper emphasizes the need for sustained redistribution policies to address inequality and promote long-term growth.