American Economist: Simon Kuznets Curves

Gary Becker’s and Kevin Murphy’s article, “The Upside of Income Inequality”, analyzes the positive effects of the income gap, and Paul Krugman’s New York Times column, “Confronting Inequality”, stresses the negative impact of the income gap; it is apparent by juxtaposing these two texts that income inequality can be effected by economic development, education, and social equality.

Income inequality describes the extent to which income is distributed unevenly among residents of an area. High levels of inequality indicate that a small number of people receive most of the total income, and that most people receive only a small share of the total. There are many advantages and disadvantages associated with the inequitable distribution of income.

"How Economic Inequality Harms Societies." Richard Wilkinson:. TED Talks, July 2011. Web. 26 Feb. 2015.

The quintile distribution can be displayed visually by a Lorenz curve. Which is a graph with percentage of income on the vertical axis and percentage of households on the horizontal axis, and the quintile data is plotted and makes a curve, which will be compared against a curve representing perfect income equality. Income inequality expressed by the Lorenz curve can be expressed by a Gini ratio, which is a numerical measure of the overall dispersion of income. This discussed data is only for a specific set of time, usually a year, and when individuals move from quintile to quintile over time is called income mobility. The main way to reduce inequality Government redistribution of income is usually when income is taken from higher income households through taxes and transfers them to

Although the income inequality is very serious in china, some economists based on “Kuznets's Inverted U-Curve Hypothesis”, still argue that is good for Chinese economy. The income inequality is the reasonable products of industrialization. They believe that China is in the initial stage of industrialization, so the income inequality is positive to Chinese economy like proving cheap labour force. However, they ignored many serious damage of income inequality to Chinese society and future economic growth.

Income and wealth inequality refers to the degree to which income is unevenly distributed among people in an economy. The share of total income received by different groups measures inequality, this visually represented in the Lorenz curve. The line of perfect equality bisects the graph with the percentage of income

In the story “Confronting Inequality”, written by Paul Krugman, Krugman introduces the rising issue of inequality, explaining how it is and has been an issue ignored by a majority of the population. Krugman uses various views and points from external sources that support the issue he claims people had begun to ignore. His main points are usually references to other people or actual facts and statistics that affect the inequality problem; such as an article called “Income Inequality Without Class Conflict” written by Irving Kristol who tried to argue the opposite, viewing the statistics on tax rates and benefit systems, as well as mentioning markets having a major impact on inequality, creating a massive reduction.

This article titled "How income inequality hurts America” written by Steve Hargreaves explains the thesis statement itself. On the other hand, he states it’s not just income equality but it’s also lifespan inequality, education inequality, and declining economic growth, which refers to the graphs shown above the starting paragraph. Mr. Hargreaves then points out a fact that the rich are getting richer, while the poor and the middle class are falling behind. Another fact concerning this issue is the 400 richest people outnumber the wealth of the bottom 150 million put together.

The average household income in the United States is, in fact, one of the highest in the world. Unfortunately, does not provide information about income inequality. There are two ways to measure income inequality: distribution by income category and distribution by quintiles. Distribution by income category involves looking at the percentages of households in a series of income categories. Distribution of quintiles involves dividing the total number of households into five equal groups or quintiles and to compare it with the percentage of personal income. The Lorenz Curve is a way to display the quintile distribution. In a graph showing the Lorenz curve, there is one straight, up-sloping diagonal line that represents a perfectly equal distribution of income, and a second curve of the actual quintile data that becomes the Lorenz curve. The space in between the two lines represents the amount of income inequality there is. This information can then be converted into a Gini ratio which is the numerical

The distribution of income in the United States, is a growing controversy. Far left and far right groups have distinctly differing opinions on income inequality and whether it is beneficial or detrimental to the economic growth of the nation. Mainstream politics, however, tend to be relatively devoid of discussion about the extreme wealth gap. The rising levels, factors, and opinions of income inequality as well as methods of income redistribution will be discussed.

The focus of Becker and Murphy’s article “The Upside of Income Inequality” is “Growth in the education level of the population has been a significant source of raising wages, productivity, and living standards over the past century.” (585). Becker and Murphy wrote “The Upside of Income Inequality” as a statement “committed to expanding liberty, increasing individual opportunity, and strengthening free enterprise.” (581). They argue that the average income for a person with a higher education keeps getting higher, and the lower class will also see a raise in the income they receive and raise the overall standard of living for communities.

The commentary from the author Jim DiEugenio(2014), of this article, Tracing the Source of Income Inequality,” does an account the second part of the book, “Capital in the 21st Century,” by Thomas Piketty. DiEugenio(2014) covers a wide array of topics concerning the public policy issue of income equality in not only the United States, but also globally in the latter half of the report of the book. In the beginning of the article, DiEugenio(2014) discussed about the differences in periods of the American economy with the eras of Reaganomics, the economy after the Great Depression, as well as the era after World War I. The economic era after the the Great Depression was a bustling time due to the programs being offered for low income

Income inequality has been a major concern around the world, and it mainly links to how economic metrics are distributed among individuals in a country. Economists generally categorise these metrics in wealth, income and consumption. Wilkinson and Picket (2009) showed in their studies that inequality has drawbacks that lead to social problems. This is because income inequality and wealth concentration can hinder or delay long term growth. In 2011, International Monetary Fund economists showed that less income inequality increased the duration of countries’ economic growth spells more than free trade, low government corruption, foreign investment or low foreign debt (Berg and Ostry, 2011).

Income redistribution refers to the concept of transferring income from the wealthy individuals to the less wealthy individuals through social mechanisms such as monetary policies, charity, welfare, land reforms, and taxation among others. Income redistribution affects the entire economy rather than selected groups of individuals. The concept of income redistribution emanates from the existence of income inequalities within an economy. Income inequality depicts a gap between the highest and the lowest income earners in an economy (Tullock 13). Income inequality is sometimes considered appropriate in societies since it acts as an incentive in free market economies, whereby in the absence of inequality, elements of economic stagnation and lack of enterprise would emerge. Conversely, income inequality is criticized on the basis of introducing contributing towards the development of key problems in the society, including progression of poverty levels. This paper seeks to explore the concept of income redistribution and its key pros and cons.

Economic inequality has been a long-debated issue within the social sciences. The origin of the most recent debate has roots in Karl Marx’s works during the 19th century. Since Marx, the equality of distribution has become a heated topic in a wide range of social science from economic to social and political. Marx saw the growing inequality and poor working conditions in the beginning of the 19th century as a never-ending process of infinite accumulation of capital. This literature subsided due to the improvement of working conditions