The reduction in income inequality, among others, remains one of the key challenges associated with the 2030 Agenda for Sustainable Development. Therefore, in this paper, various transmission mechanisms and drivers of the increasing level of income inequality are identified and possible forward-looking development policies to reduce income inequality are given. Thanks are due to the workshop participants, especially Peter Pauly. I would also like to extend my sincere thanks to Johannes Prochazka and Candice Branchoux for their excellent research support.