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"Causes of inequality:
1. Differences in ability.
2. Differences in attitude.
3. Differences in qualifications.
The above three sets of factors will cause differences in people's marginal productivity and hence differences in wage rates. Wages will also reflect the following:
1. Differences in hours worked.
2. Differences in the pleasantness/unpleasantness of jobs.
3. Differences in power.
4. Differences in the demand for goods.
5. Discrimination.

Wages and salaries constitute by far the largest source of income, and thus inequality can be explained mainly in terms of differences in wages and salaries. Nevertheless state benefits are an important moderating influence on inequality and constitute the largest source of income for the poorest 20% of households. Investment earnings are only a minor determinant of income except for the richest 1 or 2%.

Inequality is in large part the result of differences in wages. These differences reflect differences in the productivity of workers, consumer demand, power and discrimination.

Apart from differences in wages and salaries between occupations, other determinants of income inequality include differences in household composition, inequality of wealth, unemployment and the level of government benefits."