Income and wealth Inequality in Australia

1091 Words3 Pages
bulb-icon

Recommended: Essay on wealth inequalities

Inequality is present in every economy, but to what extent are income and wealth in Australia unequal and what government polices contravene income and wealth inequality? Income is defined as money that an individual or business receives in exchange for providing a good or service or through investing capital, while wealth is a measure of the value of all of the assets of worth owned by a person, community, company or country.

Income and wealth inequality refers to the degree to which income is unevenly distributed among people in an economy. The share of total income received by different groups measures inequality, this visually represented in the Lorenz curve. The line of perfect equality bisects the graph with the percentage of income proportional to the quintiles, where 20% of families account for 20% of the national income, the following 20% of families receive 20% of income and so on. However the distribution of income and wealth in an economy is never ideal, therefore the Lorenz curve will always exist below the line of perfect equality. For example in 2009-10, the 20% of Australians with the highest incomes received 40% of national income, whilst the poorest 20% only receive 10%. This has varied in 2012-13 with the richest 20% of Australia earning 33% of national income and the lowest income earners, obtaining an increased 19% from 2009-10, which exhibits a more equal distribution.

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 ...

... middle of paper ...

...roportionally higher taxes and come of welfare benefits, moderating the disposable income. As incomes fall in a recession the impact the falling incomes have for income earners is softened as high income earners pay less tax proportionally, and retain more post-tax income, while the low income earners receive benefits, thus injecting into the economy and moderating a downturn in the economy, this is fiscal boost.

These macroeconomic strategies have been applied in 2008-09 as the GFC recession impacted the economy, when the government employed an expansionary stance to support aggregate demand and production.

Inequality is existential in every economy but with the effective implementation of macroeconomic policy partnered with direct and indirect tax policies and safety net of minimum wages a more equal distribution of income and wealth in Australia is attained.

Show More
Related

  • Class and Poverty in Australia

    1827 Words  | 4 Pages

    Greig, A. & F. Lewins & K. White (2003), Inequality in Australia, New York: Cambridge University Press.

    Read More

  • Wealth Inequality In America

    2137 Words  | 5 Pages

    Wealth inequality and income inequality are often mistaken as the same thing. Income inequality is the difference of yearly salary throughout the population.1 Wealth inequality is the difference of all assets within a population.2 The United States has a high degree of wealth distribution between rich and poor than any other majorly developed nation.3

    Read More

  • Lorenz Curve: A Bisexual Analysis

    221 Words  | 1 Pages

    In the graph below, the blue line represents perfect equality in wealth distribution. For example, it shows that 20% of the wealth is own by 20% of the household. It also shows that 60% of the wealth is owned by 60% of the household.

    Read More

  • Income Inequality in the United States

    795 Words  | 2 Pages

    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.

    Read More

  • Inequality And Wealth Inequality

    713 Words  | 2 Pages

    Wealth inequality is a real issue that needs to be fixed. The imbalanced growth of the upper class compared to the middle class is a danger to American society as a whole. The rich becoming richer while the middle class remains the same leads to a power imbalance, with the rich using their money to run the country the way they see fit while the middle class speaks to ears that do not listen. The issue of wealth inequality needs to be fixed by raising taxes on the rich.

    Read More

  • Income Inequality in the United States

    3100 Words  | 7 Pages

    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).

    Read More

  • Income Inequality In The United States Essay

    1035 Words  | 3 Pages

    Income inequality in the United States, as of 2007, has reached levels not seen since 1928. In 1928, the top one percent received nearly 24% of all income within the United States (Volscho & Kelly, 2012). This percentage fell to nearly nine percent in 1975, but has risen to 23.5% as of 2007 (Volscho & Kelly, 2012). Meanwhile, in 2007 (see

    Read More

  • Wealth Inequality in the US with Sociological Viewpoints

    1100 Words  | 3 Pages

    What is wealth inequality? “It is the difference between individuals or populations in the distribution of assets, wealth or income.” [1] In sociology, the term is social stratification and refers to “a system of structured social inequality” [2] where the inequality might be in power, resources, social standing/class or perceived worth. In the US, where a class system exists (as opposed to a caste or estate system), your place in the class system can be determined by your personal achievements. However, the economic and social class that an individual is born into is a big indicator of the class they will end up in as an adult.

    Read More

  • Fiscal Policy Essay

    568 Words  | 2 Pages

    Everyone has their own political leaning and that leaning comes from one’s opinion about the Government. Peoples’ opinions are formed by what the parties say they will and will not do, the amounts they want spend and what they want to save. In macroeconomic terms, what the government spends is known as fiscal policy. Fiscal policy is the use of taxation and government spending for the purposes of stimulating or slowing down growth in an economy. Fiscal policy can be used for expansionary reasons, which is aimed at growing the economy and increasing employment, or contractionary which is intended to slow the growth of an economy. Expansionary fiscal policy features increased government spending and decreases in the tax rates as where contractionary policy focuses on lowering government spending and increasing tax rates. It must be understood that fiscal policy is meant to help the economy, although some negative results may arise.

    Read More

  • Income Inequality

    939 Words  | 2 Pages

    Income inequality has affected American citizens ever since the American Dream came into 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.

    Read More

  • Poverty Undermine Social Rights In Australia

    917 Words  | 2 Pages

    Instead, poverty research in Australia uses metrics and indexes provided by organisations such as the UN and Organisation for Economic Cooperation and Development (OECD). The OECD’s definition of poverty is earning less than 50% of the median household income (OECD reference). The latest data — for 2013–14 — shows that the median gross household income in Australia is $80,704, with the average household sitting at $107,276. This is extremely high, indicating that Australia overall is a very wealthy nation; however, if we use the OECD definition, this puts the Australian poverty line is a gross household income of $40,000 — twice the minimum cost of living. This is a poor working definition of poverty. However, the Australian Council of Social Service found in 2010, that an estimated 12.5% of Australians live in absolute (Davidson, P, 2012) with limited or no access to basic necessities as defined by the UN.

    Read More

  • What is the Multiplier Effect?

    1296 Words  | 3 Pages

    In time of economic crisis the government has a choice to cut spending or increase spending for public goods and services. “In 2009, Congress passed the American Recovery and Rein- vestment Act, which authorized $787 billion in spending to promote job growth and bolster economic activity”(Stratmann/Okolski 3). John Maynard Keynes, an economist of 20th century, suggest that the government should run a deficit if it will create jobs and increase capital gain. This theory support the current stimulus package that has been introduce during President Obama’s term. Although the flaw with this concept is that it makes the assumption the government has done studies and understands which areas needs the funding the most and knows where it will be beneficial, realistically that is not true. “Federal spending is less likely to stimulate growth when it cannot accurately target the projects where it will be most productive” (Stratmann/Okolski 2). This can be seen because political figures will spend money where it directly supports their needs as well. For instance, the political figure would rather spend money to things that will yield a p...

    Read More

  • Argumentative Essay On Wealth Inequality

    1189 Words  | 3 Pages

    Wealth inequality is the uneven distribution of resources in a given state or population, which can also be called the wealth gap. The sum of one’s total assets excluding the liabilities equates the person’s wealth also known as the net worth. Investments, residents, cash, real estates and everything owned by an individual are their assets.In reality, the United States is among the richest countries in the world, though a few people creating a major gap between the richest, the middle class and the poor control most of its wealth. For more than a quarter of a century, only the rich American families have shown an increase to their net worth.Thisis a worrying fact for the less fortunate in the country and calls for assessment (Baranoff, 2015).

    Read More

  • Essay On Income Inequality

    1524 Words  | 4 Pages

    Income inequality continues to increase in today’s world, especially in the United States. Income inequality means the unequal distribution between individuals’ assets, wealth, or income. In the Twilight of the Elites, Christopher Hayes, a liberal journalist, states the inequality gap between the rich and the poor are increasing widening, and there need to have things done - tax the rich, provide better education - in order to shortening the inequality gap. America is a meritocratic country, which means that everybody has equal opportunity to be successful regardless of their class privileges or wealth. However, equality of opportunity does not equal equality of outcomes. People are having more opportunities to find a better job, but their incomes are a lot less compared to the top ten percent rich people. In this way, the poor people will never climb up the ladder to high status and become millionaires. Therefore, the government needs to increase all the tax rates on rich people in order to reduce income inequality.

    Read More

  • Macroeconomics Coursework

    2033 Words  | 5 Pages

    Many countries in the world have been suffering a recession in their economies and UK has not been an exception. A recession is a macroeconomic term describing one of the two business cycles that economies go through. The business cycles is characterized by either a boom where there are more business activities carried with a rapid economic growth and points of recession where there is retardation min economic growth. Various aspects and factors contribute to economic growth, which is measured through GDP. This factor may include savings, investments government spending plus other factors within either an increase or a decrease. Reduction in spending may lead to a recession while a n increase in spending may lead to expansion that is a boom in the economy.

    Read More

More about Income and wealth Inequality in Australia

Open Document