1. Introduction Income inequality has grown significantly during this past decades and this phenomenon continues to increase over the years. This problem is constantly discussed in the daily news all around the world. Several consequences of this increase of inequality between people leads to economic problems such as high unemployment rates, lack of work for young people, fall of demand for certain product. The gap between rich and poor is increasing, the rich are richer and the poor are poorer as a result politicians and economists try to adopt certain policies in order to reduce this gap.
3.0 Consequences of income inequality The consequences bring by the income inequality is still a contradictory arguments on whether it is good or bad for the economic growth. In positive view, income inequality stimulatesthe aggregate economic growth. In negative view, income inequality slows down the aggregate economic growth (Andriuskevicius, Ciegis&Dilius, 2017). 3.1 Positive impacts on economic growth Income inequality reflects the rich become richer and the poor become poorer. The rich may choose to spend,give away, invest or save their money.
You need more money; you need a living wage. This problem plagues people everywhere. there is a huge difference between living wage and minimum wage. The question is not should we raise minimum wages t’s when we will raise minimum wage. But some people believe that the minimum wage is fine.
The solutions therefore interpreted as a need for greater economic growth, with a focus on building human capacity/capital. Conceptualization of poverty has broadened to include non-economic components. Thus, poverty is increasingly being recognized as multi-dimensional, distinguishing the numerous aspects of people’s lives affected by poverty, including economic and non-economic dimensions, and recognizing that poverty occurs within and is affected by the political, economic, social and cultural context (Sen,
In the story “The Upside of Income Inequality”, Gary S. Becker and Kevin M. Murphy effectively express’s the importance and need for income inequality in our society. Furthermore, Holly Ellyatt’s newspaper article Income Inequality: Is It Good For Everyone? serves to also point out that economic success and greater productivity is linked to “income inequality”. Although it may seem extremely unfair for someone to make up to two hundred and fifty times as much money as someone else, this notion of “income inequality” actually benefits the society as a whole by encouraging others to work much harder in life and better themselves and their education. For example, the increase of income inequality in the 1980’s greatly increased the education for both women and men and other races such as African Americans.
Inequality of wealth and income is an important and controversial microeconomic issue. The issue has become prevalent in the recent years because the prominence of the issue has gradually increased over time. Social media, urban life and proximity to one another can now see how much other people make or have. According to Wolf 2010 the bottom, 40% of the population has 0.3% of wealth while the top 20% possess 84% of the wealth. Economic efficiency can be attained by determining the desirable level of wealth inequality that will motive people to be more productive.
Minimum wage addresses poverty associated with low wages; it addresses poverty by increasing the income of the low paid workers. The goal of the minimum wage legislation is to redistribute earnings to low paid workers and thus lift the working poor out of poverty (Freeman, 1996). Since people who are considered to be living under poverty are those who live with less than $2, minimum wage will enable them to live on more than $2 a day. On a contrary minimum wage also takes away the little income that some employees were getting before minimum wage due to job losses therefore minimum wage is beneficiary to some of the lower paid workers while it subjects others in a terrible condition of unemployment and poverty. Advantages and disadvantages of minimum wage Advantages of minimum wage Better standard of living The minimum wage ultimately reduces poverty nationally and provides a reliable and stable source of income for many, and without it, the social consequences would be far greater than if it were not to exist.
You would probably get a lot of different definitions, be short of food, clothing, water, protection from the cold and rain. But also not to be able to influence your own life, to be powerless and marginalized. Those who are poor have little opportunity to shape their future. Approximately one billion people around the world today live in extreme poverty. Poverty can be measured in the health, food, healthcare, clean drinking water and security.
Multiple studies have shown that there is a significant increase in economic inequality over the last 25 years in several regions in the world. Economic inequality is a measurement of the income distribution that puts emphasis on the gap between the incomes of a household or an individual in a certain country. The distribution of income and wealth has become increasingly unequal since 1970 (Morris and Western, 1999). Between 2003 and 2013, income inequality even grew in well developed countries such as Germany, Denmark and Sweden. The top ten percent of earners raced ahead, while the bottom ten percent fell further behind.
This cost will then be absorbed by firms or more likely be passed on to consumers in the form of higher prices. This is an example of cost-push inflation. Such inflation erodes income gains associated with minimum wages, while causing aggregate demand levels in the economy to decline (DPRU, 2008). Effect on relative poverty Minimum wage has a limited effect in reducing poverty as those in the poorest sections of society, who tend to be those receiving Jobseeker’s Allowance and incapacity benefits, do not benefit from it. Shadow labour markets may