Income Inequality

Document Type:Thesis

Subject Area:Economics

Document 1

Contextually, income inequality analysis involves longitudinal evaluation of key indicators of wealth distribution among and across various economic and geographical spheres of age; occupation, levels of education, economic statuses and backgrounds, technology advancements, skills and training, and along social and economic policies. Contextually, the United States records the fourth highest levels of income inequality compared to other Organization of Economic Cooperation and Development countries [OECD]. For instance, employing the Gini Coefficient, statistics indicate the average income of 10% of the richest to have been 16 times larger compared to the 10% of the poorest in 2011/12 fiscal year. From a longitudinal perspective, economies experienced significant growth of income in the past 30 years with the United States recording double digits of growth of income of the richest 1%.

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Notably, the United States recorded 15% increase in income disparity compared to other OECD countries, say Sweden that recorded a 10. Customary, an increase in income growth implies increase in productivity and innovations and rise and fall of income earners achieving the income statuses over the years; with status mobility indicating equitable distribution of wealth and subsequent narrowing of income disparities. For instance, a surge in the top income share in the United States to a tune of 24% between 1980 to 2010 would imply a significant percentage drop of individuals in the top income statuses, but of 25% comparative drop within the OECD countries, the country realized 1% drop indicating stability, whereas countries like Norway and Australia had a drop of 40%. The stability indicates poor mobility of individuals within the high-income statuses and variable income distribution even in economic booms.

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From a different perspective, the variation of income distribution despite the 1% annual growth of income over the years showcases how the bottom income tier rallies with the top tiers in terms of real income. Consequently, an increase in income inequality negatively affects the comprehensive economic growth in significant indices over the years. That is, the widening gap between the poor and the rich trickles down to the general welfare of the majority who are not in the 10% rich status category, right from low social mobility to affording general social amenities. Despite a 10% and 14% growth in mean and average family incomes between 2013-2016, the aggregate real incomes stagnated within the bottom tiers of income distribution. Notably, the proportional gains in incomes experienced in the families that lacked college education and had nonwhite or Hispanic origin decreased with time by factoring out education cost and training costs.

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Hoe ownership rates, for instance, decreased to 63. 7% between 2013-2016 compared to 69. For instance, with social mobility as a key capital input for sustainable development, policies that promote education, innovations and the general development of skills need be implemented at individual and state level. For example, policies by the national government to focus on the social and economic wellbeing of the bottom 40% of the income earner would go an extra mile to ensuring optimal income redistribution in the bottom tier and active and sustainable social mobility. In context, devising optimal and practical taxation and social stratification policies would improve the wellbeing of the low-income earners to stimulate on the social inputs for economic growth. For example, in a bid to boost education opportunities and social upward mobility of the disadvantaged individuals, policy makers need to devise and implement policies that increase their access to quality and sustainable education and skills development, training and health care, and other social investments that promote sustainable development.

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