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Impact of Inequality

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October 29, 2014

IS 206GENDER ANALYSIS AND DEVELOPMENT

THE IMPACT OF INEQUALITY

Box 1: COMPARATIVE STUDIES ON INEQUALITY AND SOCIAL MOBILITY ACROSS OECD AND LATIN AMERICAN COUNTRIES Presented by Del Mundo, Maria Naida Box 2: SOCIAL AND POLITICAL COHESION, SOCIAL TOLERANCE OF INEQUALITY Presented by Gutierrez, Cherry Lou

THE IMPACT OF INEQUALITY ABSTRACT

October 29, 2014

There is growing evidence and recognition on the powerful and corrosive effects of inequality on economic growth, poverty, social mobility and political cohesion. This paper finds that the real and potential impacts of inequality in relation to economic growth, poverty, social mobility, social stability and cohesion. KEYWORDS: Inequality, Economic Growth, Poverty, Social Mobility, Political Cohesion, Gender

I.

INTRODUCTION

In relation to the worldwide gender gap, in so far as inequality also exist in political imbalance in the Philippines distinguished through the partisan move of a party, wherein, such intent, policies and term of their advocacy is their ultimate road map and reluctantly to engage in the opponent’s adherence. Colonial mindset, attributable to the Spanish era wherein their colonial stay in the country portrays the strictness and conservative ways in precluding to whom or to which is one’s belief will end up to, and upon the continuance of the American regime, where westernized ways has gotten in the minds of the Filipinos, that every choice of an American decision draws correct conclusion. Power and wealth elites also provides for the conclusiveness of a political group. Combining all these three key points will brings us the inequality on political cohesion. Thus, in this sense, we tackle how to understand and deduce this paper that is purposely created to elaborate and enhance balance by means of gender.

Gender, a usual question as to whether the person is a boy or a girl, man or woman, strong and inferior attributes that is commonly considered when such subject matter comes into a conversation. In reiteration of gender, it must be noted that the key point to standardize and obtain equality is by re-engineering the view of level of competency of women and men, as to their obtainable knowledge and provide them the competent levels of evaluation that no hierarchy is perused in such way that their skills and capacity is the criteria for the task or job being drawn as the goal for both man and woman. In this way, we pave the path of fairness and equality.

In light of the facts, the Philippines has held strong governance of empowerment, during the passage of the 1987 Constitution, wherein it mandated equality for men and women, increase participation in the political aspect and nature in the State. Page | 2

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II.

INEQUALITY AND ECONOMIC GROWTH The relationship between inequality and economic growth is complex. Studies have

found that the relationship between inequality and economic growth can be either positive or negative.

Arthur Okun, chief economic adviser to President Lyndon Johnson, published a classic book in 1975 titled “Equality and Efficiency: The Big Tradeoff”, arguing that pursuing equality could reduce economic efficiency. Promoting equal distribution can reduce incentives to work and invest - and that mechanisms such as tax code and minimum wages can be quite costly. He compared these mechanisms to a leaky bucket where in some resources transferred from rich to poor “will simply disaper in transit”; therefore it is costly because poor will not receive the full amount.

Although some people continue to hold that view, the effects of ongoing global financial and economic crisis have shifted the attention on the negative impact of rising inequality, and to the role of fiscal and social policy in shaping and curbing these effects.

High levels of inequality can stifle economic growth and participation of all members of society in the labour market, and can be a potential cause of underdevelopment (Stiglitz, 2012; Berg, Ostry, and Zettelmeyer, 2012; Easterly 2002; Bruno, Ravallion and Squire, 1996; Alesina and Rodrik, 1994). The IMF Paper by Ostry and Berg (2011) has debunked the old myth that redistribution is bad for growth as espoused by Okun. Based on the study they conducted across 174 countries, they found out that inequality can lower the duration of economic growth as illustrated in Figure 1. Countries with low levels of inequality tend to sustain high rates of growth for longer durations while growth spurts tend to fade more quickly in more unequal countries (UN Report on the World Social Situation, 2013).

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Sources:http://www.imf.org/external/pubs/ft/fandd/2011/09/berg.htm

Furthermore, inequality can also generate market volatility and instability. The 1930s Great Depression and the 2007 -2008 Great Recession, according to Kumhof and Ranciere (2010), were both preceded by high income inequality and increased debt-to-income rations among lower and middle-income households. James Galbraith (2012), in his book “Inequality and Stability”, finds that the rapid rise of inequality is driven, in large part, by finance-driven business cycle. The recent global financial crisis can attest to the findings of his book.

Global Financial Crisis

Various studies have been conducted to determine the causes of global financial crisis but the common major causes among these studies are the growing inequality, wage stagnation and financial deregulation (Foster and Madoff, 2009; Galbraith, 2012; Stiglitz, 2012; Stockhammer, 2012; Rohit, 2013). The rising inequality reduced the demands for goods and services thereby slowing economic growth. Econonomists at Standard and Poor’s Rating Services (2014) explained that rich people tend to save more their earning rather than spend it so the nation’s income gets concetrated to people at the top of income distribution causing decreased demand for goods and services to maintain strong economic growth. To bridge the gap between the lack of demands, the financial sector sought economic stimulus policies, such as financial innovations (e.g Credit Default Swaps or CDS, Credit Default Obligations or CDO) and easy credit) that can counter reduced demand and economic Page | 4

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stagnation. In the United States, the easy supply of credit allow subprime owners to buy a house mortage even though they cannot afford it. Household debt in the US rose from around 50% of gross domestic product (GDP) in the early 1980s to nearly 100% in 2007, and to 130% of disposable income (Papadimitrou, Hannsgen and Zezza, 2008; Krugman, 2010). With increased debt came the decline in savings so demand for credits continued to rise, at the same time, the expansion of hedge funds and subprime derivates increased the concentration of income and wealth at the top of income distribution (Stiglitz, 2012; Lucchino and Morelli, 2012). The combination of these factors pricked the household bubble crisis in United States, affecting several countries n Europe which lead to sovereign debt crisis in Europe.

The sovereign debt crisis in Europe revealed the unsustainable fiscal policies of some countries such as Greece, Spain and Italy. With the household crisis in United States, several countries and banks tried to contain the crisis by a ‘sudden stop” in lending. As a welfare state, Greece could no longer support the welfare costs since Greece’s social protection was heavily financed by government’s borrowing rather than collected revenues. In Spain, 90% of employment losses were temporary workers (Vaughan-Whiteland, 2012) since they were easier to let go. In emerging and developing economies, structual change has slowed since the crisis. Some jobs are not moving from low- to high-productivity sectors. In developing countries, there had been decreased in trade and aid. Philippines, for example, introduced the Economic Resilience Plan (ERP) in 2009 wherein the government allocated 4% of GDP or a total budget of Php 331 B to continuously finance critical areas in social protection services and also to increase government spending through the public -private sector projects.

The negative impact of the recent crisis highlights the importance of addressing inequality and the important role played by social and fiscal policy in shaping the effects of economic growth on poverty reduction, social mobility and social cohesion.

III.

INEQUALITY AND POVERTY

Income and non-income inequalities can shape the responsiveness of poverty to income growth because inequality can exclude people living in poverty from sharing the benefits of growth (Ravallion, 2011; Adigun, Awoyemi and Omonona, 2011; Adams, 2003, Easterly, 2000; Kakwani, 1993). With lack of opportunities for building human capbilities, Page | 5

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such as access to education and health care, people living in poverty have limited ability to fully share to the benefits of economic growth. Philippines, for example, has an economic growth of 7.2 % in 2013 which the Philippine President has lauded as the fastest economic growth in Asia. However, when people were asked if they felt the benefits of the economic growth, almost all respondents agreed that they did not feel any changes to the living, or worse, they felt much poorer today than yesterday.

While economic growth is a primary factor in reducing poverty, inequalities can constrain poverty reduction significantly. As illustrated in figure 3, the inequality-povertygrowth nexus model shows that distribution of income is necessary to poverty reduction. As proven by study made by Grammy And Assane (2006), after examining 66 developing countries over the period of 1970-79, 1980-89 and 1990-98, they concluded that growth accompanied by improved distribution worked better than either growth and distribution alone, and that provision of civil liberties and political rights enabled people to participate more actively in reducing poverty (UN Report on the World Social Situation, 2013). Distribution policies should have competitive economic incentives to effectively reduce poverty. Figure 3

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However, the experience of East Asia, particularly China, is often cited as a counterargument to the need fo having a combined development strategy of economic growth and distributional changes. For example, in China, there had been decline in poverty ven though inequality measured by Gini index rose from 0.16 in 1980 to 0.48 in 2011 (UN Report on the World Social Situation, 2013). According to Ghosh (2010), China’s income and assets were prettily low at the start of growth process and the decline in inequality reflects the difference between rural and urban inequality since rapid economic growth has increased the income of farmers. The situation brings back to the argument that inequality can lower the duration of economic growth. Several reports have been released expecting a decline in economic growth in China. China’s economic growth falls to lowest in 5 years this month.

Reducing poverty requires a combination of growth-enhancing, employmentgenerating macro-economic policies and redistributive social policies. In matters of distributive policies, these policies should not be too tighly close to growth policies or equity objectives (Mckinley, 2009; UN Report on the World Social Situation, 2013).

IV.

INEQUALITY AND SOCIAL MOBILITY

The relationship between inequality, poverty and growth can also manifest itself through social mobility. Social mobility, or intergenerational mobility, refers to degree in which individuals or groups are able to move up the socioeconomic ladder across generations. The degree of mobility in a country is a good indicaor to assess the

distributional impacts of policies for building human capabilities.

One way to measure the degree of mobility in a country is by looking at the relationship between incomes of parents and children. The intergenerational earnings elasticity (IEE) shows the fludity or rigidity of this relationship. IEE ranges from 0 (total mobility) to 1 (no mobility). Corak (2013) shows that higher levels of inequality are associated with less intergenerational mobility. See Box 1. Besides the difference of income between parents and children, the composition of households along the income distribution can also affects the degree of income mobility in a given country. According to d’Addio (2007), there are fewer opprotunities for mobility in a country characterized by smaller middle classes.

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Education is an important driver of socio-economic mobility. As various studies have evidently showed, countries with higher overall levels of eduction tend to have higher intergenerational mobility (Filmer and Pritchett, 1999; Behrman, Birdsal and Szekely, 2000; Dahan and Gaviria, 2001). In the Republic of Korea, the rapid education expansion resulted in 45% of those born between 1970 and 1985, with fathers who did not achieve high-school diplomas, received some college education by 2005 (Kye, 2011).

When creating policies to support universal education, socioeconomic background of families should also be considered since it can influence educational attainment in many ways. Studies have found substantive gaps between cognitive and non-cognitive skills of children from different socioeconomic backgrounds. In India, intergenerational education mobility tend to be much slower for disadvantaged and excluded group than for advanced class (Majumder, 2010). Similarly, intergenerational education mobility in South Africa was lower for blank Africans than for white Africans (Nimubuna and Vencatachelum, 2007).

Access to education should also be coupled with access to health care since health is an important precondition for building human capabilities. Even though there’s universal education available, if people have poor health they cannot fully participate to building capabilities such as access to education. Children from poor families may have difficulty in learning since some children may go to school without taking any breakfast or food. onversely, poor health can also be a manifestation of poverty since poverty can increase the likelihood of poor health (Adamson,2010). In Philippines, several diseases that afflict poor children can be prevented if there’s regular check up of mothers during pregnancy. Box 1: Comparative Studies on Inequality and Social Mobility across OECD and Latin American Countries

Social Mobility - or intergenerational mobility as economists prefer to call it - measures the degress to which people’s social status changes between different generations of families (intergenerational mobility) or across individual life courses (intragenerational mobility). It is seen often by many as a measure of the extent of equality of economic and social opportunity (equality of opportunities) since it captures the degree of equality in life chances - th extent which people can move upward or downward in social hierarchy, especially those people living in poverty. Page | 8

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Solon (2002) identified two reasons why intergenerational mobility is important. First, a study on the intergenerational mobility of a country can characterize the country’s inequality; and second, comparisons of intergenerational mobility across various country may yield valuable information as to how intergenerational transmission varies across countries - why some countries have higher or lower intergenerational mobility.

Social mobility can be measured in a variety of ways, by income and earnings, social class or status, or education. The most common approach has been international earnings elasticity (IEE) based on income. IEE measures the degree to which society is able to provide opportunity to change income levels across generations. The social mobility value ranges from 0 (total mobility) and 1 (no mobility). If there is no intergerenational mobility in a country then it means all poor children would become poor adults while all rich children will become rich adults.

The relationship between inequality and social mobility is a contested one. First, very little is known about the association betwen inequality and social mobility in contrast to burgeoning literature on the impact of inequality on economic growth, poverty, health and political cohesion [references]. Most studies on inequality and social mobility has been focused on the “American exceptionalism”. Second, there is no agreed benchmark on ideal social mobility value. Nonetheless, recent studies have been conducted to provide possible association or correlation between social mobility and inequality.

OECD Countries

Wilkinson and Pickett (2009) has compared social mobility in eight developed countries and found a relationship between high social inequality and low social mobility. So if a country has low social mobility, it means it has existing high social inequality. As illustrated in Figure 1, out of the eight countries studied, the USA had both the highest economic inequality and the lowest social mobility. To provide more evidence on the possible relationship between inequality and social mobility, (Corak (2013) has examined 66 countries and found similar results as Wilkinson and Pickett. Countries with high levels of inequality are associated with

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low levels of intergenerational mobility. Similarly, USA also figured with high equality and low social mobility as shown in Figure 2.

Figure 1

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Figure 2: Wilkinson RG, Pickett KE. The problems of relative deprivation: why some societies do better than others. Social Science and Medicine 2007

Figure 2

Solon (2002) has explained that Canada has three times the rate of intergenerational mobility as the United States because Canada make more public investments in its labor market, health care, and family programs than does the United States.

Latin American Countries

Information on mobility statistics is scarcely available because Latin American countries, unlike developed countries, do not have longitudinal surveys spanning three decades (Grawe 2003). In order to conduct a study on inequality and social mobility, Grawe (2003) has examined the socio-economic status of parents and that of their children than looking into income distribution. Augusto de la Torre, the World Bank’s chief economist for Latin America, agreed that the correlation between parents’ background and their kids’ achievement is relatively high in Latin American as compared to other regions (Wheatley, 2012). In Latin America, the increase in secondary enrolment and completion rates between ealry 1990s and during 2000s played an important role in the fall of wage inequality in 2000s (UN Report on World Situation Report, 2013).

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Some studies have tried to examine the social mobility using education rather than income, and this approach is called intergenerational education mobility. As illustrated in Figure 3, those countries with relatively high inequality, such as Guatemala, Ecuador and Brazil, have low social mobility (Andersen, 2000).

Figure 3: Social Mobility and Inequality in Latin America

Findings Hard work is often perceived as the way to change one’s social status, especially the poor. However, based on the studies conducted, levelling the playing field is the best approach in addressing problems in social mobility and inequality. Public policies such as early education played a role in examining the differences in intergenerational social mobility across OECD countries (Causa and Johnson, 2010).

The socioeconomic background such as the family income can somehow influence the preconditions in which people can move up or down the social ladder. (Bradbury and others, 2012; and Heckman, 2006). Those families with greater capacity to invest more in their children, either in monetary and non-monetary terms, are more likely to produce children with more developed human capital (Corak, 2012). Some countries may provide universal education and health care but if the quality of education is not par to private school especially in Latin America, then inequality will remain high. Therefore, the returns of education in the labor market should be equal for both children with rich and poor families. Public policy such as promoting universal education should consider the socioeconomic background of families Page | 12

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as well as the discrimination and social exclusion in which families, especially those belonging in particular class, ethnic group, and gender (UN Report on World Situation, 2013).

V.

SOCIAL AND POLITICAL COHESION, SOCIAL TOLERANCE OF INEQUALITY

Box 2: The OECD defines social cohesion as: A cohesive society works towards the wellbeing of all its members, fights exclusion and marginalisation, creates a sense of belonging, promotes trust, and offers its members the opportunity of upward mobility. While the notion of ‘social cohesion’ is often used with different meanings, its constituent elements include concerns about social inclusion, social capital and social mobility. Some of these elements can be quantified, and some countries have taken steps to develop suitable metrics in this field, e.g. through specific surveys assessing different aspects of people’s social connections and civic engagement. Governments which ignore questions of social cohesion risk having to face social instability and undertake ineffective policy interventions. It is clearly not sufficient to apply technocratically good policy frameworks while disregarding people’s desire for inclusive political processes. There are different areas of public policies that are keys to social cohesion.


Fiscal policy

Greater fiscal space opens a window of opportunity for development and stronger social cohesion in developing countries. For opportunities to materialise, however, fiscal policy reforms are needed. Available windfall gains and resources produced by shifting wealth are a boon to finance social programmes.

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Source: OECD (2011), Perspectives on Global Development 2012: Social Cohesion in a Shifting World,OECD Publishing, http://dx.doi.org/10.1787/persp_glob_dev2012-en

Fiscal policies are not in themselves sufficient, however: programmes should be affordable and sustainable. A critical issue in this regard is to ensure the long-term financial sustainability of social programmes, an elusive objective in the widespread context of volatile revenues dependent on fluctuating commodity prices and the prospective depletion of nonrenewable natural resources. Another important challenge to sustainable fiscal policy is that of social trust. Low levels of trust – regarding how taxes are raised and how revenue is spent – often undermine reform that considers taxes in isolation from complementary expenditure and institutional reforms. This can translate into lower revenues and fiscal policies which are generally less effective at addressing inequalities and creating opportunities for upward social mobility. In addition, even where formal democratic institutions do exist, fiscal policy tends to reflect the interests of elites and powerful lobbies if large swathes of the population are excluded from the

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political process or have limited access to collective instruments for influencing policies. In this respect, tax administration reform is another powerful way of

increasing fairness, transparency and tax morale in developing countries.


Employment and social protection Social cohesion calls for the establishment of labor market institutions that can facilitate the wage-setting, distributional and allocative roles of labor markets. Reforms setting out guarantees for workers and collective bargaining systems can begin to establish institutions that will assist markets in adjusting prices to the new labour market regime more smoothly, while ensuring that wages reflect productivity increases. In the short run, more traditional instruments of labour market regulation, and in particular minimum wages are a useful tool against working poverty even when compliance is limited. Indeed, minimum wage increases also spill over into the informal sector, raising wages throughout the economy. But they are not targeted instruments and tend to have wide-ranging side-effects: large increases in minimum wages can be costly or cause negative employment effects when misused. Moreover, the effects of minimum wage changes are unequal across workers, depending on the degree of enforcement and labour market segmentation. Active use of minimum wages to increase incomes should therefore not be a substitute for effective social policy and for ensuring that labor market institutions fulfil their price-setting role efficiently. Labor market institutions and social protection systems should be judged not only in terms of their efficiency, but also their ability to prevent or mitigate duality and segmentation. Recent innovations in social protection (the expansion of conditional cash transfers or not, social pensions, and new forms of health coverage) have helped to reduce coverage gaps in social protection. However, they can often lead to dual systems where the poorest are covered by social assistance and the wealthy by either contribution-based or private alternatives. This leaves a significant gap, a “missing middle” of coverage amongst a large segment of informal middle-income workers. Institutions will need to devolve to better reflect labour markets’ realities if they are to produce fair outcomes with minimal strife. Universal entitlements delink social protection from job status and offer the best prospects in terms of coverage levels and incentive structures for labour markets.

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Universal access to basic social services may not be achievable in the short to medium term, but governments still have a number of more affordable tools at their disposal. Extending social services via targeted cash transfers for example can be comparatively affordable; programmes in Brazil, Indonesia and Mexico have attained coverage of up to one-third of the population whilst costing less than 1% of GDP. Contribution-based systems can be unbundled and opened up to uncovered workers, as is the case of unemployment insurance savings accounts in Latin America. Fostering social cohesion via social services and other programmes is contingent on the availability of adequate resources and also on improving the efficiency of public spending. The idea that governments cannot afford measures to strengthen social protection needs to be contrasted with the fact that governments often provide large subsidies or payments which benefit the non-poor. For instance, instruments such as fuel and food subsidies can be extremely expensive and distortionary. This is particularly the case with fuel subsidies which tend to be highly regressive.


Education Education is a vital part of any social cohesion agenda as educational outcomes affect all three dimensions of the social cohesion triangle. When opportunities for quality education are afforded across the population, schooling becomes a strong leveller of opportunities, bringing prospects for upward mobility even to disadvantaged groups. Increasing educational attainment is an important way for converging countries to reduce inequality in market incomes in the long run, particularly as returns to education have changed as a consequence of shifting wealth. Beyond enrolment, the quality of education needs to receive attention so that increases in educational outcomes effectively translate into greater productivity, better growth prospects and improved chances in the labour market. Non-school inputs, such as early-life nutrition and pre-school programmes play a key role as well: more than 200 million children are estimated to fall short of their development potential due to stunting as well as iron and iodine deficiencies. Equally, instruments that reduce opportunity costs of continued education can improve attainment levels. Lowering the cost of schooling is an important first step in encouraging secondary completion and higher education enrolment.

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The schooling experience itself also impacts social cohesion, as it shapes and transmits common values that underpin social capital and inclusion. How children are schooled is important for building their sense of belonging to a society. Schooling should be organised to increase the participation of children from disadvantaged groups, thus making education more inclusive. Greater inclusiveness can also result from the development of teaching techniques and curricula that foster diversity and enhance positive perceptions of others within the system and society. This applies particularly to the better integration of minorities in education. Countries where inclusion at school is greater are generally also those where trust between different groups in society is stronger. Moreover, inclusive schooling systems tend to perform better in terms of learning outcomes than segmented ones.


Gender Despite high growth in the last 20 years, many countries have not made any real headway in improving gender equality. Cultural dynamics and the fact that social institutions lie at the root of existing power relations make challenging discriminatory social institutions a daunting task. Providing incentive for change is therefore crucial. Change should be initiated in the areas of employment, education and entrepreneurship through, for example, increasing women’s access to credit and technology and providing conditional cash transfers specifically targeted at transforming discriminatory social institutions such as forced and early marriage. A critical starting point for addressing institutional bottlenecks in the area of gender equality is to enhance women’s productive activities by guaranteeing them property and inheritance rights. Limited access to resources reduces the ability of women and girls to generate a sustainable income, and can lead them to take up more poorly paid or insecure employment. Furthermore, the lack of access to and control over land can have a negative impact on the food security of the household, increase women’s vulnerability to poverty or violence, prevent them from accessing bank loans or financial services, and reduce their decisionmaking power.



Migration Although they do face the same challenges as native populations, immigrants are also often deprived of access to decent public services. While limited resources in new immigrant destination countries cause concern over the development of specific measures against the social exclusion of immigrants, the history of integration in OECD countries seems to suggest

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that the earlier countries address this issue, the more successful policy interventions will be. Migration-related social cohesion must go beyond anti-discrimination measures. A smooth integration process should, in particular, include a comprehensive set of social, employment, education and housing measures. Efforts also need to be made to improve native-born citizens’ perceptions of immigrants. Policies should prevent and reverse the social exclusion of immigrants, which is still the biggest single barrier to full integration; foster positive bonding between immigrants and local people; and, finally, promote social mobility for immigrants by improving labour market mobility, facilitating entrepreneurship, better skills matching, and encouraging education. Civic participation Giving space to dissenting voices is fundamental to the creation of a sustainable, socially cohesive society. The harnessing of civic participation and political feedback mechanisms is essential if growth processes are not to be derailed. This is particularly true in the context of shifting wealth, where faster economic growth and more social dislocation require innovative responses. Inclusive policy making brings in the views of all stakeholders – from those who will be implementing the policies to the final beneficiaries. The policies which result from such a process benefit from having greater legitimacy and support, factors which ultimately determine their effectiveness. Implementing a social cohesion policy agenda requires effective administration and co-ordinated action across multiple policy domains. Strong institutions and a quality public service underpin successful public action. Besides, the involvement of multiple actors across different levels of government requires negotiated roles to ensure accountability.


Better data, better assessments, better policies Policy making also needs to be more evidence-based. Economic and social policies to foster social cohesion in practice require a framework for ex ante and ex post assessments of their impact: Do they lead to more or less social exclusion? Do they foster trust and civic participation? Do they help to improve social mobility? The monitoring and evaluating of social cohesion policies which can answer these questions requires new data. As advocated in the SenStiglitz-Fitoussi commission’s report in 2009, progress measurement should embrace indicators beyond GDP growth to capture other dimensions of well-being. Absolute and

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objective measures of progress should be complemented with relative and subjective measures for more effective assessment. Efforts to collect data in order to calculate such measures currently focus on developed countries and are mostly carried out by private organisations. Comparability, availability and quality of data could be improved if national statistical offices (also) gathered them. However, the potential of the data can be fully exploited only if i) there are international standards for data collection; ii) statistical capacity building is facilitated in countries where it is needed; and iii) data is made public as much as is possible. In relation now with the key points, we enter now the picture of politics in the Philippines, where it holds margin in men and women with regards to the number and political ideas and interests. In fact, out of twenty four of the seats in the senate, six of them belong to women.

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Political advocacies also have marginal slide compared to laws that have been passed by male senators.

However, studies reveal that gender gap is correlated in the status and stability of a country, of which its economic and political performance holds how it handles it people. Further, with such revelation also show that gender empowerment has enticed people to hear from women leaders in their point of views and beliefs which may in case help alleviate the situation of poverty, corruption and incohesive politics.

In recent study held by the World Economic Forum on gender gap elaborates the women empowerment in different countries, which does not read on the criterion of the equality of women but on the basis of political participation, economic participation and health participation. It statistically provided that the gender gap in the Philippines has slowly reduced, and among the 20 ranked countries, 9th place is garnered by the country.

In this view, we regain the previous Convention on the Elimination of All Forms of Discrimination against Women which was created by the UN General Assembly in 1979, which intends to lift the women from deeply rooted scheme of living, which men holds. Looking and reckoning to the points of empowering and intensifying women’s participation and decision-making will certainly boost the cohesiveness of political as well as the social ties.

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THE IMPACT OF INEQUALITY POLITICAL SYSTEM OF THE PHILIPPINES

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Republican type of system is used in the Philippines with regard to the Political construction and hierarchy. Well entrenched meaning of the Republic provides that the power lies within the people, and not with the inheritance or divine mandate. It was shelved from the American Regime, which was adapted by the 1st government of the Philippines, known as the Philippine Commonwealth. It was later changed to Republic of the Philippines, created by the 1935 Constitution.

In the latter years, Parliamentary System was introduced in the Philippine Government through the deposed demagogue, Ferdinand Marcos through the 1973 Constitution. This reveals the creation of the third Constitution, which until now is used, the 1987 Constitution.

Headed by a President, together with a Vice-President and the House of Representatives, both higher house and lower house, each of every position varies and is distinct with their individual task. Each position is held within the 6 year period of seat position, depending on the criteria presented for their re-election bid.

Taking effect with this input, it has been validly caused the reign of political figures who are relatives by virtue of consanguinity or affinity, inflicting disagreement with the opposition which intends to remove or displace the reign of the same.

The Diagram Reveals how Politics has obviously perpetrated imbalance by deducing the political strategy in reigning a certain area and leaving that their own policies and ideas should be above all and no other may be given preference unless ally with the same.

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http://devsite.mb.com.ph/career-politicians-now-at-work/ COLONIAL PERIOD OF OCCUPATION BINDED BY SECTORAL INFLUENCE AND HOW IT ALTERS THE CONCEPT OF MODERNIZED VIEW OF PEOPLE As it has been written in the rich history of the Philippines, colonial era still beget the mentality of people in their beliefs, views and even the decision-making of certain paths. This has opposed the purview of modernized outlook of the people that the own decision making is a key point in perpetrating political stability, thus creating a road block to proper

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At one point, in the political aspect of the country, such derivation of vote still manifests the colonial mentality, and even religious beliefs which were driven from the past invaders, has been scrutinized to completely dominate in the choices of the people of their political entity.

At an instance, politicians endorsed by a certain sect or any distinguished group of person has been dominantly been the favourable candidate, which predominates the choice or the own decision making of a person. This diagram shows how the alteration of one’s decision making has been deviated through a sectoral/colonial choice in order to maintain the stand of such group.

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Illusions of Influence The Political Economy of United States-Philippines Relations, 19421960

http://www.rappler.com/move-ph/28884-iglesia-cristo-picks-candidates

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PARTISAN MOVEMENT AND HOW IT INTERTWINED AND PARTED UNITY Partisan influence rekindles the kind of political agenda of a party, wherein it spreads out the plot, forum and platform of a political entity, of which the same view shall be consistently be present in the electoral bidder and of its co-candidates that such political equality in reform and legislation exist. It has been vividly written from the past that the existence of partisan group has formulated the existence of gap, misunderstandings and misinterpretations resulting to incohesive attribute of the government.

Table below describes the political partisan relationship of Philippine Government and their rich history of the outcome of the present partisan entities.

http://www.gmanetwork.com/news/story/311550/news/nation/liberal-party-leads-houseseats-in-16th-congress

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http://upload.wikimedia.org/wikipedia/commons/f/f7/Evolution_of_Philippine_political_parti es.png

VI.

CONCLUSION

We should move away the common perspective that inequality affects economic development only. A survey on the impacts of inequality illustrates the real and alarming impacts of inequality not only on economic growth but also in poverty reduction, social mobility and social cohesion. It also stresses the importance that inequality affects us all, whether you belong at the top or bottom of income distribution, as discussed in global financial crisis.

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THE IMPACT OF INEQUALITY REFERENCES: Adamson, Peter (2010). An overview of child well-being in rich countries: A comprehensive assessment of the lives and well-being of children and adolescents in the economically advanced nations. Report Card No.7. Florence, Italy: UNICEF Innocenti Research Centre.

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Andersen, L.E. 2000. “Social Mobility in Latin America.” La Paz, Bolivia: Universidad Católica Boliviana, Instituto de Investigaciones Socio-Económicas. Mimeographed document. Azevedo, Viviane and Cesar Bouillon. (2009). Social Mobility in Latin America: A Review of Existing Evidence. Available from: http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=2113089 (accessed on 26 October 2014). Berg, Andrew, and Jonathan D. Ostry (2011). Inequality and unsustainable growth: Two sides of the same coin? IMF Staff Discussion Note 11/08. Washington, D.C.: International Monetary Fund. Berg, Andrew and Jonathan Ostry (2011). Equality and Efficiency. Finance and Development, September 2011, Vol. 48, No. 3, Available from: http://www.imf.org/external/pubs/ft/fandd/2011/09/berg.htm (accessed on 26 October 2014). Causa, Orsetta and Asa Johnson. (2010). ntergenerational Mobility Studies in OECD Countries.OECD Journal, Volume 2010. Available from: http://vvv.oecd.org/dataoecd/5/8/49849281.pdf (accessed on 26 October 2014). Corak, Miles (2013). Inequality from generation to generation: The United States in comparison. In The Economics of Inequality, Poverty, and Discrimination in the 21st Century, Robert Rycroft, ed.,Santa Barbara, California: ABC-CLIO. Foster, John Bellamy, and Harry Magdoff (2009). The Great Financial Crisis: Causes and Consequences. New York: Monthly Review Press. Galbraith, James K. (2012). Inequality and Instability. A Study of the World Economy just before the Great Crisis. New York: Oxford University Press. Ghosh, Jayati (2010). Poverty reduction in China and India: Policy implications of recent trends. DESA Working Paper No. 92. ST/ESA/2010/DWP/92. New York: Department of Economic and Social Affairs of the United Nations Secretariat, January. Grammy, Abbas, and Djeto Assane (2006). The poverty-growth-inequality triangle hypothesis: An empirical examination. Journal of Policy Modeling. Available from: http://www.econmodels.com/upload7282/a77f04149bbad14085ce30ac170e7da0.pdf Grawe, Nathan (2004). Intergenerational mobility for whom? The experience of high- and low-earning sons in international perspective. In Generational Income Page | 28

THE IMPACT OF INEQUALITY Mobility in North America and Europe, Miles Corak, ed. Cambridge: Cambridge University Press, pp. 58–89.

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_________________. (2014). How Increasing Income Inequality is Dampening US Economic Growth, and Possible Ways to Change The Tide. Available from:https://www.globalcreditportal.com/ratingsdirect/renderArticle.do?articleId=1351366& SctArtId=255732&from=CM&nsl_code=LIME&sourceObjectId=8741033&sourceRevId=1 &fee_ind=N&exp_date=20240804-19:41:13 (accessed on 26 October 2014). __________________. (2013). Inequality Matters. New York. United Nations. Available from: http://www.un.org/esa/socdev/documents/reports/InequalityMatters.pdf (accessed on 26 October 2014). Krugman, Paul (2010). Block those economic metaphors. New York Times. December 12. Available from: http://www.nytimes.com/2010/12/13/ opinion/13krugman.html. Kumhof, Michael, and Romain Rancière (2010). Inequality, leverage and crises. IMF Working Paper, WP/10/268. Washington, DC: International Monetary Fund Kye, Bongoh (2011).Intergenerational transmission of women’s educational attainment in South Korea: An application of a multi-group population projection model. Demographic Research vol. 24, Art.3, pp. 79-112. Majumder, Rajarshi (2010). Intergenerational mobility in educational and occupational attainment: a comparative study of social classes in India. Margin, vol. 4, No. 4, Available from: http://mpra.ub.uni-muenchen.de/40939/ (accessed on 3 October 2013). McKinley, Terry (2009). Revisiting the dynamics of growth, inequality and poverty reduction. Discussion Paper 25/09, Centre for Development Policy and research, School of Oriental and African Studies, University of London. Nimubona, Alain-Désiré, and Désiré Vencatachellum (2007). Intergenerational education mobility of black and white South Africans. Journal of Population Economics, vol. 20, No.1, pp. 149-182. Okun, Arthur M. (1975). Equality and Effi ciency: the Big Trade-off. Washington D.C.: Brookings Institution Press. Papadimitriou, Dimitri, Greg Hannsgen and Gennaro Zezza (2008). Fiscal stimulus: Is more needed? Levy Institute Strategic Analysis (April). Available from: http://www.levyinstitute.org/pubs/sa_apr_08.pdf. Stiglitz, Joseph E. (2012). The Price of Inequality: How Today’s Divided Society Endangers our Future. New York: W.W. Norton & Company, Inc. Vaughan-Whitehead, Daniel (2012). Work Inequalities in the Crisis: Evidence from Europe. Geneva: International Labour Offi ce.

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THE IMPACT OF INEQUALITY

October 29, 2014

Wheatley, Jonathan. (2012). Latin America’s Middle Class Trap. Available from:http://blogs.ft.com/beyond-brics/2012/11/13/latin-america-and-the-middle-class-trap/ (accessed on 26 October 2014). Wilkinson, R. G., & Pickett, K. E. (2007). Problems of Relative Deprivate. Social Science & Medicine, 65(9), 1965-1978. Available from: https://www.equalitytrust.org.uk/sites/default/files/attachments/resources/problems-ofrelative-deprivation.pdf (accessed on 26 October 2014).

SenStiglitz-Fitoussi commission’s report in 2009

http://www.gmanetwork.com/news/story/311550/news/nation/liberal-party-leads-houseseats-in-16th-congress

http://www.gmanetwork.com/news/story/311550/news/nation/liberal-party-leads-houseseats-in-16th-congress http://upload.wikimedia.org/wikipedia/commons/f/f7/Evolution_of_Philippine_political_parti es.png

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