...Income Inequality In Chapter 20 of microeconomics one of the main points to this chapter is to understand income inequality and what causes income inequality. The three points I think they are very important to understand income inequality is the definition, and two examples of what causes income inequality. Education and training and discrimination are two examples that can give a more visual perspective of what income inequality is. The definition to income inequality according to the McConnell “Income Inequality is the distribution of an economy’s total income among households or families” McConnell (411) The concept of inequality is distinct from that of poverty and fairness. Income inequalities are used by to measure the distribution of income, and economic inequality among the participants in a particular economy, such as that of a specific country or of the world in general. According to the webpage businessdictionary.com “While different theories may try to explain how income inequality comes about, income inequality simply provide a system of measurement used to determine the dispersion of incomes.” In the text book from economics the author said “There are several causes of income inequality in the United States. In general, the market system is permissive of a high degree of income inequality because it rewards individuals based on the contributions that they make, or the resources that they own, in producing society’s output” McConnell (414) One of the main factors...
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...measure of inequality in income distribution. Gini coefficient is specified as a ratio between 0 and 1. A society that tallies 0.0 on the Gini scale is said to possess perfect equality in income distribution. A society with a score of 1 suggests total inequality. Gini coefficient expects that no person in a society has negative wealth or net income. The coefficient is named after its inventor, the Italian statistician Corrado Gini (23rd May, 1884-13th March, 1965). The Gini coefficient is usually defined mathematically based on the Lorenz curve, which plots the proportion of the total income of the population (y axis) that is cumulatively earned by the bottom x% of the population (see diagram). The line at 45 degrees thus represents perfect equality of incomes. The Gini coefficient can then be thought of as the ratio of the area that lies between the line of equality and the Lorenz curve (marked 'A' in the diagram) over the total area under the line of equality (marked 'A' and 'B' in the diagram); i.e., G=A/(A+B). The Gini coefficient can range from 0 to 1; it is sometimes multiplied by 100 to range between 0 and 100. A low Gini coefficient indicates a more equal distribution, with 0 corresponding to complete equality, while higher Gini coefficients indicate more unequal distribution, with 1 corresponding to complete inequality. To be validly computed, no negative goods can be distributed. Thus, if the Gini coefficient is being used to describe household income inequality, then...
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...Lane Kenworthy in Chapter Two of his book, Jobs with Equality, lays out a various reasons why one should care about inequality. Kensworth, however, spends a bulk of the chapter discussing the results of inequality based on some data in addition to a host of speculative ideas that should make the reader more interested and focused on inequality in their society. The excerpt does focus heavily on the lowest income brackets in society making the distinction between poverty and inequality difficult to identify. While he demonstrates through survey data that people are concerned about inequality, his findings support the notion that individuals should care about low equality because as the top earners have gotten wealthier, the percent of the population in poverty. Kenworthy struggles to put forward an argument that shows how greater inequality is detrimental to economic growth. Kenworthy write that, “ high levels of inequality may be viewed by those at the middle and bottom of the income distribution as excessively unfair, thereby reducing worker motivation and workplace cooperation” (16). While this statement may sound like a plausible effect of high inequality, Kenworthy is only speculating and not supporting his statement with specific data. Could it be possible that due to inequality those in the lower classes have a greater incentive to work because they know that if they receive a promotion, their salary will grow substantially? This variable would also be quite difficult...
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...economic inequality Maastricht University | | | | School of Business & Economics | | | | Place & date: | 18th November 2014 | | Name, initials: | Große Entrup, Carina | | ID number: | I6096321 | | Study: | International Business | | Course code: | ebc1009 | | Group number: | 46 | | Tutor name: | Emre Ergin | | Writing tutor name: | Kirsty Donald | | Writing assignment: | Main Paper (Task 10) | | number of words: | 1990 | | carina.grosseentrup@maastrichtuniversity.nl Table of Contents 1. Introduction 2. Government intervention 3. Government intervention to reduce income inequality 3.1 In-kind transfers 3.2 Minimum wage 3.2.1 Effects of minimum wage on labour market 3.3 Income tax 4. Conclusion 1. Introduction Although income grew by almost three percent per year for all income classes in the period from 1950 to 1980, the ones that were mostly blessed with the highest income growth were the top earners (McDowell, 2012). Income can differ enormously between the different classes of a society and the range between the top earners and those at the bottom of the society becomes larger and larger. Income inequality is a wide discussed topic by all social classes. The well earning upper-class, people who have to struggle with a minimum living wage and the shrinking middle-class, which has to worry most about its future living situation, are affected by it (Mankiw, 2012). Economic inequality can...
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... Draft Why Income Equality is Important Arthur MacEwan[1] March 2009 “The social system is not an unchangeable order beyond human control but a pattern of human action.”—John Rawls (1971, p. 102) In recent years “poverty reduction” has become the watchword in development agencies, in international lending institutions, and among development economists generally. The focus on poverty reduction reached a high point perhaps with the articulation of the Millennium Development Goals (MDGs) and with the extensive analytic work that has accompanied the MDGs.[2] Yet, much of the discussion of poverty reduction and economic development in low and middle income countries has either ignored the issue of income distribution or has tended to view income distribution only in terms of its impact on economic growth. Poverty and inequality, however, are intimately bound up with one another.[3] Both as an analytic issue and as a policy issue, there are severe limitations in attempting to deal with poverty – or, more broadly, with economic well-being – without also examining income inequality. Indeed, it is questionable that we can even define poverty independently of income distribution. In this essay, I want to develop the argument that economists and economic policy-makers should focus much greater attention on inequality as measured by the distribution of income (and wealth). The traditional focus simply on absolute levels of income as a measure of poverty...
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...Income inequality in Turkey and its causes and effects on the Turkish population Maastricht University | | | | School of Business & Economics | | | | Place & date: | Maastricht,08 December 2014 | Name, initials: | Canli, T | ID number: | 6091093 | Study: | International Business | Course code: | ebc1009 | Group number: | 1 | Tutor name: | Pierfrancesco, Guarino | Writing tutor name: | Campbell, Gabriel | Writing assignment: | Main Paper (Task 10) | | | t.canli@maastrichtuniversity.nl Table of Contents 1. Introduction 2 2. Income Inequality and its components 2 3. Gini coefficient and inequality 3 4. Turkey´s economic structure 3 5. Wage distribution in Turkey 4 6. Main causes of inequality 5 6.1 Return on capital and increase of economic input 5 6.2 Relationships between people and social mobility 5 7. Effects on Turkish population 6 7.1 Education, child labor and social mobility 6 8. Possible solutions 7 9. Conclusion 8 10. Works Cited 9 11. Figures 10 12. Tables 10 1. Introduction In the past decades the topic “Economic Inequality” has risen in popularity. The reason for this trend is mostly because economic inequality has risen drastically around the world. There are many forms of economic inequality, e.g. gender inequality, regional disparities, and wage inequality, only to name a few. Thus many politicians are discussing about economic inequality, particularly in Turkey. The largest driving...
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...“An imbalance between rich and poor is the oldest and most fatal ailment of all republics.” –Plutarch. Inequality has been a problem for a long time, and every country has some form of inequality. It can be economic, social, and gender. Inequality is an issue, but there need to be poor for there to be rich. The problem is the gap between the rich and the poor. The distribution of wealth is too uneven. The main purpose of this essay is to address the question that many people are asking themselves: is inequality a consequence of too much or too little government intervention. The government intervenes in the economy in four ways. First, it produces public goods and services, such as education, infrastructure, national defense, and health care....
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...1. a) Discuss the effects of income inequality on a nation’s economic conditions. Income inequality is the unequal distribution of income among individuals of an economy (Income Inequality, 2014). In other words, the difference between the wealthy individual’s income and middle-class to poverty-stricken individuals’ incomes continues to increase. Such disparity can have detrimental effects on the economy. Those individuals who have a low-income are less able to purchase goods. As income inequality between individuals increases, money moves from those who used it to purchase their basic needs to those who already had enough and more. This then causes a weakened aggregate demand for products because the middle-class and poor can no longer afford...
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...is a problem is that the wider gap often lead to greater inequality among people, yet society has not found a way to solve this inequality (Treanor, Oct 13, 2015). To make it easier to demonstrate how income difference results in social inequality, CEOs, for example, who gives workers minimum compensation, work in top floor of high rise office buildings where they can overlook an entire city, whereas some people work more than 40...
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...i a l Tr e n d s September 2012 Income Inequality in Canada: How does Manitoba compare? Can we do better? The Canadian Centre for Policy Alternatives has been documenting the rise in inequality in Canada since 2006. More recently, the Conference Board of Canada and the OECD have confirmed this trend. These organizations also report that inequality in Canada is now increasing faster than is the case in many other countries. In their highly acclaimed 2009 book The Spirit Level: Why More Equal Societies Almost Always Do Better, Wilkinson and Pickett showed the impact of inequality on a variety of measures such as levels of crime, teenage pregnancies, life expectancy and educational achievement (to name a few). The study concluded that countries that are most equal do best. If Canada wants to measure up to more equal countries, the growing gap between rich and poor will need to be addressed. The federal government has the most important role to play in redressing the imbalance. CCPA and others have suggested how poverty and inequality can be tackled through improved policies and programs, and better redistribution of wealth through taxes and transfers at the federal level. But provincial governments also have a responsibility. A recent study in Ontario shows that province to be the most unequal. Our analysis looks at the trend in inequality across Canada with a focus on measuring progress in Manitoba for individuals earning market incomes. As do the authors of the Ontario study...
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...Education and Income Inequality: A Meta-Regression Analysis Abdul Jabbar Abdullah* Hristos Doucouliagos Elizabeth Manning - FIRST DRAFT - Please do not quote without permission from the authors September 2011 Abstract This paper revisits the literature that investigates the effects of education on inequality. Specifically, the paper provides a comprehensive quantitative review of the extant econometrics literature through a meta-regression analysis of 64 empirical studies that collectively report 868 estimates of the effects of education on inequality. We find that education affects the two tails of the distribution of incomes; it reduces the income share of top earners and increases the share of the bottom earners, but has no effect on the share of the middle class. Inequality in education widens income inequality. Education has a larger negative effect on inequality in Africa. The heterogeneity in reported estimates can be largely explained by differences in the specification of the econometric model. JEL Codes: I24, C01 Keywords: Education, inequality, meta-regression analysis Number of words: 12,683 * Corresponding author. Abdullah: Universiti Teknologi Mara Sarawak Campus, Malaysia and PhD Candidate Deakin University, ajabd@deakin.edu.au Doucouliagos: School of Accounting, Economic and Finance, Deakin University, douc@deakin.edu.au Manning: School of Accounting, Economic and Finance, Deakin University, elizabem@deakin.edu.au 1 Education and Income Inequality:...
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...Income inequality Name Date Abstract In any given population, there is a difference between what people within the population earn. The uneven distribution of income in any given population is income inequality. In order for there to be income, there has to be several sources of income. These sources of income may be combinational or independent per person receiving the income. Income may result from wages, rent, bank account interests, salaries or even profits made in business transactions ( Stiglitz, 2012). In his hypothesis, Karl Marx foresaw income inequality in a capitalistic as a major problem that would lead to an economic evolution. The main reason he foresaw an evolution was due to the recurrent nature of income inequality. In an income inequality situation, the richer keep getting richer due to a better income, while the poor keep getting poorer. The gap between the top earners and the low-income earners keeps widening in an income inequality situation. In America, almost 95% of the national wealth is under 5% ownership; this situation leaves 95% of the population to scrounge for the limited 5% wealth (DeNavas et. Al, 2005). Introduction In order to understand the complexities of economic inequality, the best specimen to use for the study is a family. In the study, the family’s income is under analysis, and then the family members ranked from the lowest income earner to the highest income earner. After the ranking, the incomes aid in establishing a Lorenz...
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...“How income inequality benefits everybody” written by George F. Will was published in the Washington Post. Will begins the article by explaining that workers in China manufacture goods for other countries and earn about as much as Americans would spend on a latte each day. The author then explains that this cycle increases American’s disposable income. In the next paragraph, Will mentions that most of the people who were the richest people in the 1980s were no longer the richest people in 2013. He then suggests that the world needs more billionaires like Mark Zuckerburg, Steve Jobs, and Bill Gates. Although these people would be able to charge more money for their products, they charge less because more people will buy their products if they are sold at a lower price and “profits attract imitators and innovators.” In the next section of this article, Will explains that he believes that monopoly profits are a good thing because they show people how...
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...Abstract Research has shown that economic inequality can adversely affect us as an individual and society. Economic inequality does and can affect an organizations performance through employee development which will affect its individual employees and their interactions at work. I will provide an overview of the relationship between economic inequality and management. Introduction Inequalities have been on the rise and on the public’s mind since the Occupy Wall Street (OWS) protests which have been noted by many government agencies (i.e. Congressional Budget Office, 2011), international economic organizations (i.e. Organization for Economic Co-operation and Development [OECD], 2011) and researchers (Piketty, 2014). Inequality debates still capture headlines and continue to stir debates, for example, Oxfam’s assertion that the 85 richest people in the world hold as much wealth as the poorest half of the world, but also occupied a central stage in the discussions at the annual meeting of World Economic Forum (Oxfam, 2015). This has been researched and studied for years. The earliest article accessible through Web of Science was published in 1930 and discussed the effect of rural migration on urban–rural economic inequality (Rutledge, 1930). Since 1930, research has been done in a range of to examine the relationships between economic inequality and socioeconomics, including economic growth (Kuznets, 1955), public health (Marmot et al., 1991), socio-political instability (Alesina...
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...providing a way ahead for addressing the main issue, income inequality. In the view of the author of this paper, Freeland tries to incite pity of the plutocrats. Regardless, she does provide an extremely important lesson for everyone, which is the significance of education. Therefore, this paper focuses on the book’s relevance, how income inequality could impact the economic futures of the next generation, and areas on the book that the author of this paper disagrees and agrees with. Relevance The book can be seen as a doom and gloom examination of income inequality to those who are not part of the 1 percent, much less the .1 percent. On the hand, rather than focus on the income inequality between the plutocrats and everyone else, the book can be used as a wakeup call to the average person to take their personal finances seriously. While the middle-class in America is shrinking, the middle-class family income is still defined as “$42,000 to $126,000 annually in 2014 dollars for a household of three.” Additionally, according to a 2015 study, roughly 46 percent of...
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