Income Inequality

3032 Words Aug 30th, 2015 13 Pages
Income inequality
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Abstract
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).
In his hypothesis, Karl Marx foresaw income inequality in a capitalistic as a major problem that would lead to an economic evolution. The main reason he foresaw an evolution was due to the recurrent nature of income
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Classification of what causes inequality lies in two different classes in a broader sense, which are; individual causes, or external conditions leading to income inequality ( Rousseau, 1992). In simpler wording, the causes of inequality lie within endogenous causes and exogenous conditions.
Endogenous causes of income inequality
Endogenous causes are those causes that are unique and attached to an individual’s characteristic. These characteristics lie in the ability of an individual to produce more than other individuals hence earning more than other individuals in the same market. These characteristics include better qualifications in carrying out a given job or other uncommon attributes that make the individual more valuable in the market place.
The most common individualistic abilities sought after in the market include intelligence, charisma, personality and physical agility. An example of an individualistic attribute in use is intelligence, in the modern market, IQ tests used in measuring a person’s intelligence directly reflects on the earning capability of that person. A person with a very high intelligence quotient is likely to end up making more money in the job market as opposed to a person with a poor intelligence quotient.
Another endogenous cause for income inequality is individualistic
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