The Impact Of Financial Development On Society 's Inequality Gap

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.

The Gini coefficients of rural populations increased about 75% and the urban increased about 113% in these 30 years. Moreover, the aggregate Gini coefficient for China reached 0.4 by 2000, which imply the serious income inequality of China in general.

Nau then explains how there are three hypotheses to the shift in economic power toward the investors and their concentration and growing income share during the decades of 1990s to 2000s. In the first place, Nau presents the hypotheses that the income concentration of the wealthiest was being driven by investment gains. At the same time, he presents that also at this time, top-income households took on the title of investors imitating their behaviors and characteristics. Finally, his third hypothesis states that both the contribution of investment income-to-income inequality increased relative and changed to non-investment income.

The wealth gap, or wealth inequality, is known as the unequal distribution of assets within a population. The wealth gap in America between the lower and upper classes is rising exponentially. This imbalance within the distribution of wealth leaves those who aren’t as financially stable to struggle to achieve the same standard of education, and overall living necessities, such as housing, as those who’s wealth persistently grows. The rising wealth gap plaguing American society is bringing those of the lower and middle classes to a set disadvantage point compared to those who have an affluent amount of money. Although this inequality is contributing to an emergent opportunity gap, a solution can arise through new legislation concerning financial

Money has become the lethal weapon that controls everything in society, it is an essential need in order to survive. Without money one simply cannot provide for their basic needs such as food, housing, clothing etc. As the value of money increases in the country it creates a heavy burden on the lower class. In terms of wealth in the United States we have the lower class (bottom twenty percent), the middle class (second twenty percent, middle twenty percent), and the upper class (fourth twenty percent, top twenty percent). As time passes by, the gap between the top twenty percent and the bottom twenty percent rapidly increases, leaving a dramatic gap between the two. The question that comes to thought is, is the distribution of wealth in the

The number of children who are living in poverty have decreased for the first time in almost ten years. The Census Bureau reported a 0.5 percent decrease of Americans living in poverty from 2012 to 2013. Poverty is among the country’s contemporary social problems in the Twenty-First Century. According to the Census Bureau, 45.3 million people were categorized as living in poverty in 2013. To address contemporary social problems like poverty, one must take an in depth look at the reasons why there are so many people dealing with poverty and the challenges that arise from trying to escape it.

Income inequality is the unspoken truth of American life. Millions of Americans live in poverty while the minority holds the majority of the wealth. This problem has become more severe in recent years, with the wealth gap increasing exponentially. While innovation drives economics in the free market, recent innovations have caused the wealth gap to become skewed. Broadband Internet is one particular innovation that has spurred economic growth but has hurt the lower class. Broadband Internet can be defined as “768 Kbps download and 200 Kbps upload” (Dunbar). Although there are many varying classification of broadband Internet, this definition will be utilized for the purposes of this paper. The non-adoption of broadband Internet by those living

The sociological views of functionalist and conflict theorist on stratification and economic inequality have had profound impact on the current economic discussion. In the past, economist have argued that wealth inequality is essential for “economic strength and social stability. [5] That wealth inequality “is needed to reward hard work, talent and innovation”. [6] However, in recent years, many economist have come to the conclusion that extreme wealth inequality, can lead to economic stagnation and social instability. What degree of

The wealth gap in the United States is way off compared to what people may think it is or what they would like it to be. I’m actually very shocked of what I found. If we divide the entire United States in five different groups, you can say the first group is the poor, the second is the middle class, third and fourth are even progressively richer and the fifth group is the richest. Personally I would say maybe 40 to 50 percent of Americans are poor. They probably make nothing to twenty thousand a year. The middle class is probably 20 percent of American and they make about 30 to 70 thousand a year. The rest, which are the rich and the richer, makes everything else. My perception of the wealth gap was pretty close to what most Americans think.

The three consequences that are education, health and security are three results of the wealth gap American can try to stop them from growing more. However, there are four solutions can decrease this inequality. Those solutions should the government do it to eliminate the gap to be high. The first solution, the government should invest more money in food and health. For instance, the government can support the farms by giving them money to reduce the cost to be available for all people. The second solution is the government should try to decrease the cost living by taking some actions such as force the wealth people to invest more money to help the poor by investing more in the United States. Building factories, companies and organization can

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).

This study tries to examine the relationship between financial development and income inequality by exploring a large cross-country sample for the period 1992-2001. The results show some support for the inequality-narrowing hypothesis. In contrast, the results reject the inequality-widening hypothesis. And the panel data regression provides some weak support for the inverted U-shaped hypothesis.

On the other does Minsky theory tell us the whole story about the financial crisis, most notably from Engelbert Stockhammer and his theory of “Rising inequality as a cause of the present crisis” (Stockhammer, 2012). His theory has four main points why growing inequality has led to the financial crisis. Firstly, with growing inequality can have an adverse effect on aggregate demand because consumer’s marginal propensity to consume (MPC) will increase. By deregulation, occurring it allows governments to have a larger deficit for a longer period creating two new modules, which are a debt lead model and an export lead model. The penultimate cause was that with the new debt lead model, households are maintain the same consumption even though real

Government policy and norms are very important to insure equality in any society. The distributions of resources are not equal among individuals of society than how the equality in society can be established. Governmental intervention is required in this issue to robust the sources of survival and strengthen the income generation activities. One of the major solutions of this issue can be financial inclusion. According to Bigsten & Levin (2000) it is not necessary that the economic growth of any country will surly benefit the marginalized people in society. It is determined by the government policy and norms that the benefit will reach to the lowest segment of the society. In this research paper we find that GDP growth in urban areas and growth

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.