Positive Consequences Of Income Inequality

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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. Basically, the rich contributes the larger portion of resources to investment activities and technological improvements which lead to economic growth(Andriuskevicius, Ciegis&Dilius, 2017). The high-income households use their accumulate savings to actively take part in investment activities such as investment in capital stock and private equity. These investment activities increase the business growth and thus require more labor input and effort to produce higher gross domestic product (GDP). Indirectly, the rich also provides additional job opportunities for the middle and low-income households. Without income inequality, the low-income households may be worse off. Besides, income inequality creates incentives for the entrepreneurs to take risk to invest in new businessand technological developments which lead to economic growth. (Petersen &Schoof, 2015) According to the author of The Times Picayune, Jennifer Larino, she

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