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Inequality Of Wealth And Income Essay

887 Words4 Pages

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. Income includes wages, salaries, rental income, dividends, welfare payments and profits from businesses. Wealth on the other hand includes ownership of assets, savings, wealth held in insurance policies and that held in bonds. The living standards are reliant on the distribution of resources and the level of economic activity. The proportion of national income going to different groups and the share of society that lives below the official poverty line can be used to measure …show more content…

The distribution of income and wealth is the manner in which wealth and income is divided among the population in a society. An equitable distribution of wealth and income can promote the development and speed the growth of an economy. Individuals who are likely to have the least wealth and income are the unemployed, underemployed, the disabled, the elderly and those working under minimum wages. Remedies to the unequal distribution of income include progressive taxes. This system of taxation takes higher taxes for those with higher income and comparatively lower taxes for low-income earners. Progressive taxation helps in the redistribution of income. If such taxation is accompanied by welfare payments to low income earners, the disparity between those who earn high and low income can significantly

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