INCOME INEQUALITY.

Income inequality, or the wide gap in wage growth and value between the highest-earning citizenry and the lowest-earning workers in a given nation, is increasing at an alarming rate.On a global scale, the bottom earners’ income increases by only 1.4 percent, while the top earners’ grows by 2 percent yearly. In the United States, income inequality increased the widest among developed nations – the richest 1 percent growing by 275 percent, while wages of the poor grew by only 20 percent in 30 years.

CAUSE :

- Labor market outcomes

- Globalization

- Technological changes

- Policy reforms

- More regressive taxation

- Plutocracy

- Computerization and increased technology

- Ethnic discrimination

- Gender discrimination

- Nepotism

- Variation in natural ability

- Neoliberalism

EFFECTS:

- Health and social cohesion

- Utility, economic welfare, and distributive efficiency

- Aggregate demand, consumption and debt

- Monopolization of labor, consolidation and competition

- Economic incentives

- Economic growth

- Cross-country evidence

- Comparisons with the United States

- Mechanisms

- Housing

- Aspirational consumption and household risk

SOLUTIONS :

Example :

“There are all kinds of excuses for inequality: It is beyond our control – market forces like globalization, trade liberalization, the technological revolution, the “rise of the rest.” Others assert that doing anything about it would make us all worse off, by stifling our already sputtering economic engine. These are self-serving, ignorant falsehoods.”

Solutions:

• Straighten and strengthen the legal framework to prevent abuses.
• Market forces should be shaped, not left as “forces.” Other countries shaped their market forces in ways that have lowered inequality while creating more opportunity and growth.
• Take care of the young, as they are our most valuable resource. Countries far poorer than the U.S. have decided that all young people should have access to food, education and health care so they can fulfill their aspirations.

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