Global Income Inequality

In the United States, high standard of living is not equally shared with in the Americans. The 1970s and 1990s was period where economic inequality began to grow. Emmanuel Saez, an economics professor at UC Berkeley has been doing a research for the U.S. income inequality. He states that there has been an increase since the 1970s, and has reached levels that have not been seen since 1928. “In 1928, the top 1% of families received 23.9% of all pretax income, while the bottom 90% received 50.7%. But the Depression and World War II dramatically reshaped the nation’s income distribution, by 1944 the top 1%’s share was down to 11.3%, while the bottom 90% were receiving 67.5%, levels that would remain more or less constant for the next three decades. But starting in the mid- to late 1970s, the uppermost percent income share began rising dramatically, while that of the bottom 90% started to fall.”(DeSilver) Ever since then, economic inequality continues to increase, especially in the last three decades.

Changes in the make-up of the U.S. population are likely to cause continued growth income disparity. The U.S. population is growing most rapidly among the groups that are most likely to have low incomes and experience some form of discrimination. Children in these groups are less likely to attend college or to receive other educational

Along with globalization market forces has had the greatest impact on income equalities in the United Sates. Thomas Piketty says that “by definition, in all societies, income inequality is the result of adding up these two components: inequality of income from labor and inequality of income from capital. The more unequally distributed each of these two components is, the greater the total inequality ... [a] decisive factor is the relation between these two dimensions of inequality: to what extent do individuals with high income from labor also enjoy high income from capital? Technically speaking, this relation is a statistical correlation, and the greater the correlation, the greater the total inequality, all other things being equal” (Piketty & Goldhammer, 2014, p. 242). In the U.S. the correlation between the two dimensions has become so astonishing that “President Obama called economic inequality “the defining challenge of our time.” But while Americans acknowledge that the gap between the rich and poor has widened over the last decade, very few see it as a serious issue. Just five percent of Americans think that inequality is a major problem in need of attention” (Fitz,

In Income Inequality: Too Big to Ignore, Robert H. Frank paints a picture to the reader about the struggles of pier pressure. For example: an upper-classmen chooses to buy a big house and fancy clothing. This acts as a “frame of reference” to the changes and norms of the society. If he spends money on something nice, a middle-classmen will then go and decide to do the same thing, and then a lower-classmen…all the way down the social hierarchy. This is what he calls an “expenditure cascade.” Robert relates this with a person’s downfalls, which can be traced due to lower income inequality. Income inequality basically means that in a given quantity, the dispersion of income is underlined by the gap between individuals and or households with

Wealth inequality in the United States has grown tremendously since 1970. The United States continuously reveals higher rates of inequality as a result of perpetual support for free market capitalism. The high rates of wealth inequality cause the growing financial crisis to persist, lower socio-economic mobility, increase national poverty, and have adverse effects on health and well being.

In order to understand what could cause wealth inequality, the income in South Dakota will be examined. While it is well understand that income distribution and wealth distribution are two separate entities, the two are related and generally cause one another. In South Dakota, from the 1970’s to the mid 2000’s the household income of the bottom fifth grew by 24.3% (in real dollars) however, the income of the top fifth grew by 91.7%. In addition, if the timeframe is shortened to the 1990’s to the mid 2000’s the bottom fifth had a decrease in income of 12.5% yet, the top fifth still experienced 25.7% growth. As a result, South Dakota experienced the second highest change in income inequality during these periods (McNichol). The dramatic change

In any given population, there is a difference between what people within the population earn. The uneven distribution of income in any given population is income inequality. In order for there to be income, there has to be several sources of income. These sources of income may be combinational or independent per person receiving the income. Income may result from wages, rent, bank account interests, salaries or even profits made in business transactions ( Stiglitz, 2012).

The highest earning fifth of U.S. families earned 59.1% of all income, while the richest earned 88.9% of all wealth. A big gap between the rich and poor is often associated with low social mobility, which contradicts the American ideal of equal opportunity. Levels of income inequality are higher than they have been in almost a century, the top one percent has a share of the national income of over 20 percent (Wilhelm). There are a variety of factors that influence income inequality, a few of which will be discussed in this paper. Rising income inequality is caused by differences in life expectancy, rapidly increases in the incomes of the top 5 percent, social trends, and shifts in the global economy.

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).

In-depth research on inequality highlights the problematic reality that the average American employee has not seen increases in wage benefits from the U.S.'s productivity gains much like top income earners have. Rising inequality in the United States has been noted as the growing divergence between growing productivity and the flattening of average wages since the late 1970s (Citation). The average worker's compensation only grew by 8% from 1979 to 2009 despite an 80% increase in productivity (Sylla). Meanwhile, wages for top percent of income earners have been growing at a disproportionally higher rate than productivity. C.E.O.s from big companies went from earning about twenty times more than their average employee in 1965, to earning about

In the US income distribution amongst civilians has changed drastically over the last several years. According to Congressional Budget Office (CBO) after tax-income, (income which is received after all taxes have been deducted) has grew more households with highest incomes. After-tax income has grown more for the highest-income households than it did for any other household group. According to the statistics by CBO between 1979 and 2007 income has grown by 275% for the top 1% of households whereas only 18% for the bottom 20% of household. As the share in the scale of income has grown for families with higher household incomes the scale of income for families with lower household incomes has even further lowered. CBO reports that’s the top fifth of the population has seen an increase of 10 points increase in their increase in their share of after-tax income whereas all the other groups have seen a 2 to 3 point decline.

Income inequality has been a major issue in American history. There are many different factors that contribute to inequality. These include education, wealth, discrimination, ability, and monopoly power.

The distribution of income in society is a major aspect of the broader issue of socio-economic inequalities. A clear illustration, and a major cause, of the disparities present in the incomes earned by different sections of society is the

When you look closer at what is happening in our society, it is clear that GDP growth has failed to deliver. For example, while GDP roughly doubled between 1980 and 2007, the distribution of all that money has left us more unequal today than at any time since the 1920s. GDP, in other words, tells us nothing about how national income is distributed, and it ignores the negative economic consequences of

The debate on the distributional effects of globalization is often polarized between two extremes. While the optimistic consider that albeit inequality might have rose in the initial phases of industrial development, it has eventually declined as the country’s transition to industrialization was completed. On the other hand, those with the opposing view argue that albeit globalization may enhance overall incomes, the benefits are not shared equally among the citizens of a country, with clear losers in relative and possibly even absolute terms. Besides, increasing income inequalities may not only raise welfare and social concerns, but may also limit the drivers of growth because the opportunities created by the process of globalization may not be fully