Economic Disparity Mea, Moo, Teale
What are the causes? Impact of Colonialism Population Growth Foreign Debt War Leadership Issues Trade Inequalities Wages and salaries Labour market Taxes Education Globalization Gender Economic Development Individual preferences
What are the Effects? Crime Social, cultural, and civic participation Utility, economic welfare, and distributive efficiency Aggregate demand, consumption and debt Monopolization of labor, consolidation, and competition Economic incentives Economic Growth Poverty Enviroment
Addressing the problem.
Measurements In order to measure economic inequality, the following factors must be evaluated: Changes in the structure of households. Assortative mating In the bottom percentiles number of hours worked has decreased. The difference between the demand for and supply of skills. There are tentative signs of a possible convergence of inequality levels towards a common and higher average level across OECD countries. With very few exceptions (France, Japan, and Spain), the wages of the 10% best-paid workers have risen relative to those of the 10% lowest paid.
Life expectancy Infant mortality Homicides Imprisonment Teenage births Trust Obesity Mental illness Social mobility Social Impacts
Environmental Impacts The smaller the economic inequality, the more waste and pollution is created. If there were fewer people however, this multiplier would be lower, and thus the amount of environmental damage would be lower as well. As such, the current high level of population has a large impact on this as well. If population levels would start to drop to a sustainable level, human inequality can be corrected, while still not resulting in an increase of environmental damage.
Why society cares about inequality: Economic Impacts Equality of opportunity may be harder to achieve in an unequal society. Many economists have focused more on poverty than inequality. Poverty not only causes low standards of living and poor health but damages both individuals and society by preventing those at the bottom from realising their potential, perhaps because they are unable to obtain a decent quality of education to prepare them for competition in the labour market. Those with greater wealth provide to their children resources and thus opportunities that the less wealthy cannot, and this may make it more difficult for society to achieve equality of opportunity. Inequality impacts politics. Economic power tends to create political power even in democratic and pluralistic societies. It may also create pathways from inequality to instability, because both the economic and political implications of inequality can create various backlashes.
What will happen next? Aid fatigue Business interest vs Civil society Calls to eliminate development assistance
Scale independence This property says that richer economies should not be automatically considered more unequal by construction. In other words, if every person's income in an economy is doubled (or multiplied by any positive constant) then the overall metric of inequality should not change. Of course the same thing applies to poorer economies. The inequality income metric should be independent of the aggregate level of income. Population independence Similarly, the income inequality metric should not depend on whether an economy has a large or small population. An economy with only a few people should not be automatically judged by the metric as being more equal than a large economy with lots of people. This means that the metric should be independent of the level of population.
Economic impact of changing technology Greater access to education would be expected to reduce income inequality by allowing a greater share of the population to be engaged in high-skill activities. Increased access to education is associated with more equal income distributions on average.