Income Inequality

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Globalization, which is specifically the expansion of trade, encourages worldwide consumption and makes the world become a ‘global village’ (Chanda, 2007). However, it also leads to many serious environmental and social problems such as the collapse in biodiversity, climate change, financial crisis and inequality (Goldin, 2009). Among all the problems, income inequality is the most serious one and two widely used methods to soften its impacts are raising the minimum wage and taxing the rich. Although globalization induces worldwide inequality in many aspects such as educational inequality and income inequality, the most serious one is income inequality since it exacerbates the wealth gap and consequently causes severe social problems. The world GDP has risen from 36 percent to 55 percent since 1980 as a result of the expanding world trade caused by globalization (Lall, Jaumotte, Papageorgiou & Topalova, 2007). Global Domestic income has increased, but the income distribution across the continents appears to be unequal. For instance, in the United States (U.S.), among the income distribution, the bottom 20 percent have an income boost of only 3.7 percent while the top 5 percent enjoy an income boost of 57 percent (Kearney, 2014). Furthermore, this widened wealth gap makes the people in poverty become poorer and has resulted in many serious social problems. According to Thorbecke and Charumilind (2002), the crime rate may become higher since “legal wages represent the opportunity cost to crime”. Also, because the level of income has a positive and explicit correlation with the health condition, the poor’s average life expectancy may become shorter. Therefore, the income inequality is severe since it increases the wealth gap and gen... ... middle of paper ... ...013). Raising Minimum Wage Would Ease Income Gap but Carries Political Risks. Retrieved from: http://www.nytimes.com/2013/02/13/us/politics/obama-pushes-for-increase-in-federal-minimum-wage.html?pagewanted=all&_r=0 Pethokoukis, J. (2013). There are better anti-poverty tools than the minimum wage. Retrieved from: http://www.aei-ideas.org/2013/08/there-are-better-anti-poverty-tools-than-the-minimum-wage/ Sabia, J. J., & Nielsen, R. B. (2012). CAN RAISING THE MINIMUM WAGE HARDSHIP?: new evidence from the SIPP. Review of Economics of the Household, 1-40. Thorbecke, E., & Charumilind, C. (2002). Economic inequality and its socioeconomic impact. World Development, 30(9), 1477-1495. Topalova Kearney, M. S. (2014). Income Inequality in the United States, retrieved from: http://www.brookings.edu/research/testimony/2014/01/16-income-inequality-in-the-united-states-kearney

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662 Words | 2 Pages
David J Lynch says that, “ [s]ocieties that manage a narrower gap between rich and poor enjoy longer economic expansions”, however, in the United States the gap between the have and have-nots has widened (source C). “This country is just getting worse and worse and worse … and that is not a recipe for stable growth” (source C). If we do not do something soon our capitalist country will fall. In order for the income inequality gap to lessen to create a more stable economy the government must invest in education and unionize workers and not provide higher taxation for the top one percent.
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Income Inequality