1. Introduction
In the last few decades, many countries have achieved high rate of economic growth in their development process, which could be explained by the development of industrialization and globalization processes (Jaumotte, Lall & Papageorgiou 2013). However, beside the economic achievement, it is witnessed that the issue of income inequality has persisted, or even increased (IMF 2014). If looking through the World Bank’s statistical table of GINI coefficient index, one of the indicators used in measuring income inequality, income inequality can be seen not only in developing countries, but also in developed countries in recent decades (IMF 2014; World Bank 2014). The increase of income inequality in recent decades is contradicted with the prediction of Kuznets (1955) that income inequality would be declined if the countries have reached the high level of economic performance and industrialization.
Under the economic view, income inequality is understood as the situation in which income is distributed differently across population (IMF 2014). The differences in income distribution can effect directly to both economic growth and poverty reduction strategies of the countries (Jihène & Ghazi 2013). Therefore, causes of income inequality are still the concern of many scholars. There are many reasons that make income inequality become greater such as individual talent, changing in household structure, aging, inequality in accessing social services, corruption (Biewen & Juhasz 2010; Blanchflower & Slaughter 1999; Garvy 1952; Ragayah 2008). However, this essay, with attempt to investigate the reasons of inequality in income distribution across the individuals and groups at the country level, which associated with industrializa...
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...l manufactories could not find enough skilled workers to expand their manufacturing process (Vietnam General Statistics Office 2010) is a relevant example to illustrate Charles-Coll’s (2011) argument. Therefore, investment in education and having appropriate education policy is important for reducing income inequality.
4. Conclusion
In summary, income inequality has increased in recent decades in most countries in the world by many reasons, and these reasons have very complex interconnection with each other. In this paper, only three causes, which related to the globalization and technological changes is taken in to account. Similarly, there are many channels that governments can apply in order to reduce income inequality problem, among those, fiscal policies, including tax policies and social welfare, education are the primary tools for addressing income inquality.
Income inequality has been and will forever continue to be a highly discussed topic in society. As a social experiment, income equality has historically failed. The adage from the communist era “from each according to his ability; to each according to his needs,” ran counter to human nature and experience. On balance, there are positive aspects to unequal income which include; its success in creating a more educated work force, competition among people to succeed and more stimulated productivity, which do not always, but tend to balance out any negative impacts such as; concentration of wealth, social consequences and outsourcing, that it may have.
Firebaugh, Glenn. "The Trend in Between-Nation Income Inequality." Annual Review of Sociology (2000): 323-352. online.
Another method of measuring inequality is through use of the Gini coefficient, it represents statistical dispersion of the income distribution of nations residents. The trends in Australia’s Gini coefficient are a fall from 0.329 in 2009-10 to 0.32 in 2011-12, thus illustrating a reduction in inequality due to tax cuts and increased welfare ...
Nevertheless, as income inequality as well as gender inequality are the two outstanding types of inequality equippe...
The Sociological Explanations for Class Inequality There is much debate in sociology about whether class is still important. Many argue that class is no longer important as an individual's identity and life chances are based more status and cultural factors such as lifestyle, values, intelligence, education and the like, the post-modernists state that class has ceased to be the prime determinant of identity and suggest that societies are now organised around consumption rather than production, consequently people now identify themselves in terms of what they consume rather than in terms of social-class position. Class identity has therefore fragmented into numerous separate and individualised identities. Others argue that class is still a central influence on people's lives, that it affects their life chances (health, education, voting, social mobility etc.), they argue that class inequality exists and that such inequalities are widening rather than narrowing. Early theories such as Functionalist theory argue that inequality is functional for society since it makes sure that those who show the most potential talent are encouraged to develop this talent through higher education and training, with the promise of higher incomes when they qualify (deferred gratification).
The highest earning fifth of U.S. families earned 59.1% of all income, while the richest earned 88.9% of all wealth. A big gap between the rich and poor is often associated with low social mobility, which contradicts the American ideal of equal opportunity. Levels of income inequality are higher than they have been in almost a century, the top one percent has a share of the national income of over 20 percent (Wilhelm). There are a variety of factors that influence income inequality, a few of which will be discussed in this paper. Rising income inequality is caused by differences in life expectancy, rapidly increases in the incomes of the top 5 percent, social trends, and shifts in the global economy.
Income inequality in the United States has increased and decreased throughout history, but in the recent years, the widening gap has become a serious issue. Income inequality is usually measured by Gini coefficient. According to this method coefficient varies between 0 and 100; while 0 represents complete equality (income is distributed equally among all the population of the country), 100 represents complete inequality (only one person receives all the country’s income, while the rest of the population receives nothing). According to the Census of Bureau, the official Gini coefficient in the U.S. was 46.9 in 2010. This is way higher than the all-time low coefficient of 38.6 set in 1968 (qtd. in Babones).
Recently, studies have shown that income inequality has many connections that have caused the gap in the United States. According to the research I found, income inequality is connected to corruption, trade, wages of workers, and education. The world income inequality had declined since the twentieth century according to the studies found (Clark). Corruption falls increasing on low income individuals more than higher income individuals. Additionally, the trade theory suggests that the free trade might have level up the income inequality higher within countries by the different patterns of wages and demand for workers who are skilled and unskilled (Silva and Leichenko). Moreover, the education of wealthier people has it easier because the learning efforts of education are unbalanced. Besides, income inequality in the United States is hurting our economy due to the all the issues of corruption, trade, wages, and education. Suggested by Robert H. Frank article called “Income Inequality: Too Big to Ignore,” the income inequality is bad for our economy (Frank).
America 's economy is dependent on the middle class. Slowly, the middle class is beginning to decrease. Soon enough there will be only the wealthy and the poor. Economic inequality is the gap between the upper class and the lower class. It is a problem that is growing everyday. Technology, education, race, gender, and globalization are the main causes of economic inequality. Each one of these causes contributes to the vicious cycle of economic inequality. The battle for our country 's financial wellbeing is upon us.
Throughout American history, wealth inequality has taken many different forms, and has affected many people and groups in different ways. In the following analysis, two measures of 'wealth inequalities' will be used. First is a more traditional view, regarding the distribution of income and wealth among the upper to lower classes. The size of the gap has varied over time, widening and compressing throughout American history. While America has been thought of as a middle class nation, this is a fairly recent phenomena that began after World War II. In this context of today, this idea appears to be fading as wealth is becoming more concentrated towards the upper classes. Additionally, these effects of both the concentration and equalization of income distribution can differently affect groups of people.
Income inequality has affected American citizens ever since the American Dream came to existence. The American Dream is centered around the concept of working hard and earning enough money to support a family, own a home, send children to college, and invest for retirement. Economic gains in income are one of the only possible ways to achieve enough wealth to fulfill the dream. Unfortunately, many people cannot achieve this dream due to low income. Income inequality refers to the uneven distribution of income and wealth between the social classes of American citizens. The United States has often experienced a rise in inequality as the rich become richer and the poor become poorer, increasing the unstable gap between the two classes. The income gap in America has been increasing steadily since the late 1970’s, and has now reached historic highs not seen since the 1920’s (Desilver). UC Berkeley economics professor, Emmanuel Saez conducted extensive research on past and present income inequality statistics and published them in his report “Striking it Richer.” Saez claims that changes in technology, tax policies, labor unions, corporate benefits, and social norms have caused income inequality. He stands to advocate a change in American economic policies that will help close this inequality gap and considers institutional and tax reforms that should be developed to counter it. Although Saez’s provides legitimate causes of income inequality, I highly disagree with the thought of making changes to end income inequality. In any diverse economic environment, income inequality will exist due to the rise of some economically successful people and the further development of factors that push people into poverty. I believe income inequality e...
Marc Priester and Aaron Mendelson say that income inequality has been increasing for the last 30 years. The definition of income inequality, “…refers to the extent to which income is distributed in an uneven manner among a population” (Priester and Mendelson). In the United States, income inequality is a gap between the rich and poor (Priester and Mendelson). Income inequality has several views that include the Conservative, Liberal, and my views.
The IMF (2014). Fiscal Policy and Income Inequality. International Monetary Fund Policy Paper. Available on: http://www.imf.org/external/np/pp/eng/2014/012314.pdf. [Accessed on 21st of April 2014].
The author also stated that in year 2000 income inequality was higher in peri-urban areas than urban areas. Adebayo (2002) found out that in the rural areas of Ibadan metropolis, agricultural income contributes most to the overall income inequality accounting for 91% while rental income makes the least contributing to overall rural income inequality accounting for just 0.17%. In the urban areas, non-farm income makes the largest contribution to overall income inequality accounting for 80% while transfer income reduces urban overall income inequality by 0.13%. Elberset al. (2003) estimated income inequality for Ecuador, Mozambique and Madagascar. Based on a statistical procedure that combines households’ survey data with population census data, the analyses showed that the share of within-community inequality in overall inequality is high. Specifically, Gini-coefficients computed were between 0.320 – 0.518 and 0.320 – 0.440 in Madagascar and Mozambique respectively.
The Relationship between Globalization, Economic Growth and Income Inequality. (2010, January). TEMEP Discussion Paper. Retrieved from ftp://147.46.237.98/DP-51.pdf