Poverty and income inequalityEconomic inequalityIncome inequality the gap between rich and poorWidening wealth gapThe gap between rich and poor is becoming widerHow to solve the gap between rich and poor9.4B: Growing Gap Between Rich and Poor - Social Science ...
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Economic inequality (also known as the gap between rich and poor, income inequality, wealth disparity, or wealth and income differences) ... Skiptomaincontent KeyPointsKeyTerms Economicinequality(alsoknownasthegapbetweenrichandpoor)consistsofdisparitiesinthedistributionofwealthandincome. LearningObjectivesDiscussthecausesofeconomicinequality KeyPoints Economicinequalityreferstoinequalityamongindividualsandgroupswithinasociety,butcanalsorefertoinequalityamongcountries. InequalityismostoftenmeasuredusingtheGinicoefficient,astatisticusedtodemonstratethedispersionofwealthinagroup. Boththecapitalistmarketandgovernmentinterventionscanincreaseordecreasethelevelofinequalityinasociety. KeyTerms supplyanddemand:Aneconomicmodelofpricedeterminationinamarketbasedontherelativescarcityorabundanceofgoodsandservices. ginicoefficient:Ameasureoftheinequalityofastatisticaldistribution,rangingfromzero(totalequality)toone(maximalinequality),usedinvariousdisciplinesbutespeciallyineconomicstocompareincomesorwealth. CapitalistMarket:Referstoaneconomicsysteminwhichsupplyanddemanddeterminesthecostofgoodsandwagesforservices. Economicinequality(alsoknownasthegapbetweenrichandpoor,incomeinequality,wealthdisparity,orwealthandincomedifferences)consistsofdisparitiesinthedistributionofwealth(accumulatedassets)andincome.Thetermtypicallyreferstoinequalityamongindividualsandgroupswithinasociety,butcanalsorefertoinequalityamongcountries.Theissueofeconomicinequalityisrelatedtotheideasofequity:equalityofoutcomeandequalityofopportunity.Therearevariousnumericalindicesformeasuringeconomicinequality,butthemostcommonlyusedmeasureforthepurposesofcomparisonistheGinicoefficient(alsoknownastheGiniindexorGiniratioforItalianstatisticianandsociologistCorradoGini).TheGinicoefficientisastatisticalmeasureofthedispersalofwealthorincome.AGinicoefficientofzeroindicatesthatthereisperfectequality—assetsareequallydividedbetweenallpeopleinthegroup.AGinicoefficientofoneindicatesthatallofagroup’swealthisheldbyoneindividual.Mostcountriesfalltowardthemiddleofthisrange. MapofGlobalGiniCoefficients:UsingGinicoefficients,thismapillustratestheextenttowhicheachcountryintheworldhasinternalinequality,oragapbetweenitsrichestandpoorestcitizens. Therearemanyreasonsforeconomicinequalitywithinsocieties,andtheyareofteninterrelated.Acknowledgedfactorsthatimpacteconomicinequalityinclude,butarenotlimitedto: Inequalityinwagesandsalaries; Theincomegapbetweenhighlyskilledworkersandlow-skilledorno-skillsworkers; Wealthconcentrationinthehandsofafewindividualsorinstitutions; Labormarkets; Globalization; Technologicalchanges; Policyreforms; Taxes; Education; Computerizationandgrowingtechnology; Racism; Gender; Culture; Innateability Amajorcauseofeconomicinequalitywithinmoderneconomiesisthedeterminationofwagesbythecapitalistmarket.Inthecapitalistmarket,thewagesforjobsaresetbysupplyanddemand.Iftherearemanyworkerswillingtodoajobforagreatamountoftime,thereisahighsupplyoflaborforthatjob.Iffewpeopleneedthatjobdone,thereislowdemandforthattypeoflabor.Whenthereishighsupplyandlowdemandforajob,itresultsinalowwage.Conversely,ifthereislowsupplyandhighdemand(aswithparticularhighlyskilledjobs),itwillresultinahighwage.Thegapinwagesproducesinequalitybetweendifferenttypesofworkers. Apartfrommarket-drivenfactorsthataffectwageinequality,governmentsponsoredinitiativescanalsoincreaseordecreaseinequality.Socialscientistsandpolicymakersdebatetherelativemeritsandeffectivenessofeachapproachtoregulatinginequality.Typicalgovernmentinitiativestoreduceeconomicinequalityinclude: Publiceducation:Increasingthesupplyofskilledlaborandreducingincomeinequalityduetoeducationdifferentials. Progressivetaxation:Thericharetaxedproportionallymorethanthepoor,reducingtheamountofincomeinequalityinsociety. Minimumwagelegislation:Raisingtheincomeofthepoorestworkers Nationalizationorsubsidizationofproducts:Providinggoodsandservicesthateveryoneneedscheaplyorfreely(suchasfood,healthcare,andhousing),governmentscaneffectivelyraisethepurchasingpowerofthepoorermembersofsociety.
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