The second is the relationship between inequality and sociopolitical instability. The third concerns the political economy implications of high inequality'. Finally, the fourth channel through which inequality affects the pace of output growth is related to imperfect capital markets and investment in education. And it is assumed that their higher savings will quasi automatically lead to greater investments. As discussed in previous TDRs (see, in particular TDR 2006, Annex 2 to chap. I. and TDR 2008, chap.