Why does income inequality occur?

There are several reasons as to why income inequality occurs. One of them being that wages are set by the market. There are many factors that tie into the market deciding what certain wages should be set as. A few factors are availability of workers, skills, and the level of competition jobs. Income inequality occurs because richer households tend to become more rich while currently lower class households experience a decline.

The main five reasons described by reuters can be found here.