Economic Inequality In Cities

Abstract

Today, the economic inequality is widening between cities and the gap of economic growth between cities is becoming larger and larger when comparing between the poor and rich cities. Trends of inequality are unique to developing countries (EMDCs) and emerging markets and these is more prevalent along the sectors of finance, education and health care (De La Croix & Delavallade, 2011). The paper addresses the issue of economic inequality in cities and the reason behind the widening gap present among the rich and poor cities. The paper also addresses the reasons behind the economic inequality of cities especially in developing nations and emerging markets. The paper addresses the consequences of the economic inequalities explaining the

According to the income distribution human capital model, a relationship exist between income and educational inequality, where a negative or positive effect on income inequality could result from an increase in educational attainment (skill premium). Overall, the education inequality effect largely relies on different actors like the government, investments’ return rate and the individual’s education investment size. This is why cities will large populations of skilled people that are educated can accumulate immense wealth acquired from their professions while cities with lower levels of educated people (skilled) and higher uneducated dwellers (unskilled) can result in a wide gap between the poor and the rich, which leads to economic inequalities between the cities (Dabla-Norris et al.,

A large economic inequality gap implies that the poverty levels are quite high and this implies that the country’s ability to provide amenities like health, education and security are crippled and this may eventually create economic burdens to the country. Acquired power shuffles among the rich can weaken tax policies in favor of the rich, thereby leading to low tax return collection and minimal funding of the economy due to lack of government revenue (Corak, 2013).

Government Initiatives to Lower Economic Inequality

a) Progressive taxation – governments and local authorities should tax the wealthy proportionally higher as compared to the poor and this will help to minimize the income inequality amount within the cities (Autor, 2014).

b) Product subsidization or nationalization – by lowering the cost of basic services and goods such as healthcare, housing and food enables the government to effectively enhance the poor people’s purchasing power in the society (Autor, 2014).

c) Public education – by providing affordable education systems to the society helps to increase the skilled labor force supply and thereby minimizing the income inequality brought about by the differentials in education (Autor, 2014).

d) Minimum wage legislation – improving the minimum wage of the unskilled workers can boost the gap in wages between the highest