The Inequality Of Income Inequality

1229 Words Apr 15th, 2015 5 Pages
Income Inequality
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 essay will be structured as follow:
1- Theoretical Analysis: showing reasons that cause income inequality.
2- Empirical evidence.
3- Possible policies to solve the inequality problems.
4- Conclusion.
1. Theoretical Analysis
An important factor in the creation of inequality is variation in individuals’ access to education (Becker, et. Al, 2007). According to Bosworth et. Al, (1999) education in a field that requires or demand a high number of workers, creates high wages for those with advance education. As a result, those who are unable to afford good quality education or choose not to participate in schools or colleges, generally receive much lower wages and thus it lowers aggregate savings and investment. In particular, the increase in family income and wealth…
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