In terms of GDP per capita, Hong Kong is considered a developed society. However, its income inequality has long been relatively high. This paper investigates why prolonged income inequality in Hong Kong has persisted despite rapid economic growth. The authors argue that while the impact of economic restructuring on the less-skilled labour market and the redistributive role of social policies on household income are two major forces that have contributed to a rapid rise of GDP per capita, the same two factors have served to exacerbate income inequality. In the absence of appropriate government policies, the laissez-faire approach to economic development has not equalised income distribution.