Income Inequality

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Income inequality and insights for possible solutions As the trend of globalization has been growing vastly, economies have thrived across many countries, and people living in those countries are becoming wealthier at both material level and spiritual level. At this stage, many inequalities occur. Following those inequalities are protests and conflicts, demanding the authority to address and resolve those issues. One of the most controversial inequalities is income inequality. Income inequality refers to differences in the distribution of income, meaning the gap of income between the rich and the poor in a nation (Shin, 2012). The level of this inequality depends on many factors, for instance culture, volunteering, the state of the economy,…show more content…
Besharov and Call (2009) started by pointing out the difference between relative poverty and absolute poverty. Absolute poverty is the traditional way of measuring poverty, which is mainly adapted in the US (Besharov & Call, 2009). It is calculated against a specific amount of income determined as the amount needed to meet physical needs of people. Depending on the types of income taken into account, the poverty threshold measured by this approach differs significantly, meaning that the current US income redistribution policy could be ineffective and inefficient (Besharov & Call, 2009). Despite criticism and protests demanding to alter this poverty measurement, Besharov and Call (2009) stressed that it is hard for the authority to adjust this measurement due to the fact that the eligibility of various contemporary means-tested, social assistance benefits was determined by this measure. On the other hand, relative poverty is the poverty measurement commonly adapted in Europe. Its calculation is based on the income of a selected percentile of the society, and its thresholds are usually set at either 50 or 60 percent of median disposable household income. Hence, given the nature of these thresholds and the subjectivity, relative poverty is more accurately seen as a measure of income inequality (Besharov & Call, 2009). This implied that income redistribution approach of the US to diminish income inequality could be flawed. Following inappropriate poverty measurement is the fact of growing income dispersion. Statistics showed that well-educated individuals tend to earn more and receive faster raises than those who were not well educated (Besharov & Call, 2009). Along with the rising returns to
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