Inflation directly correlates to inequality---they’re ev doesn’t assume the overall effect.
Arkadiusz Sieron 17, at the Institute of Economic Sciences, University of Wroclaw, “Inflation and Income Inequality,” Prague Economic Papers 26(6):633-645, DOI: 10.18267, oj
There are many explanations of this phenomenon, such as globalization and skillbiased technological changes, but the redistributive impact of inflation has been understated. This is puzzling, taking into consideration the correlation between rising income inequality and the accelerated pace of monetary inflation after the final abandonment of the gold standard. One potential reason for their lacuna may be that mainstream economists focus nowadays on price inflation rather than monetary inflation, and on price (and wage) rigidity rather than the Cantillon effect. In consequence, they consider inflation a regressive tax, or examine only the redistribution from creditors to debtors. Their observations are often very insightful; however, the redistributive effects of inflation are much more complex. This is because the inflationary redistribution of income (and wealth) depends on many things, such as institutional factors, access to new money, the differences in consumption baskets, or the structure of economic agents’ assets and liabilities (Laidler, Parkin, 1975). In other words, changes in the relative income (and wealth) position of different groups depend in large measure on movements in relative prices of goods and assets and differences in the composition of ownership of goods and assets. This is why analyses that focus only on one type of redistribution, such as Piketty (2014), who focuses on the redistribution from labour to capital, cannot be fully satisfactory.8
In this paper we have offered a more systematic analysis of the redistributive effects of inflation. We demonstrated that even uniform monetary inflation increases income inequality because lower-income people generally have less ability to protect themselves against inflation than higher-income people. Moreover, they possess a greater part of their wealth in cash and may suffer more due to institutional reasons such as tax-bracket creep or imperfect indexation of social benefits.