...Market Failure: Poverty and Income Inequality Donna Butler South University Online ECO2071 Principles of Micro-Economics Week 5, Assignment 1 Professor Brandt May 29, 2015 Market Failure: Poverty and Income Inequality Every country in the world needs basic information on the residents that live there. This information is needed for planning, for development and for trying to improve the quality of life for those residents. In order to have good planning, reliable, accurate, detailed information and information that is up-to-date needs to be gathered. This is one of the things that the census does. It gathers information for many different reasons and uses. The information is used to make it possible to plan better services, solve existing problems and to improve the quality of life. The statistical information that is gathered is very essential for the democratic process because it enables the citizens to look at and examine the decisions that are made by the government and the local authorities. From this information citizens can decide if they are serving the public that they are meant to be helping. The information from the census also provides detailed statistics that are very important for communities and for businesses. The Census Bureau also reports the poverty data from several major household surveys. The census reported that in 2010 the poverty rate in the US was 15.1%. The report also showed a shocking decline of household incomes during the worst...
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...Lane Kenworthy in Chapter Two of his book, Jobs with Equality, lays out a various reasons why one should care about inequality. Kensworth, however, spends a bulk of the chapter discussing the results of inequality based on some data in addition to a host of speculative ideas that should make the reader more interested and focused on inequality in their society. The excerpt does focus heavily on the lowest income brackets in society making the distinction between poverty and inequality difficult to identify. While he demonstrates through survey data that people are concerned about inequality, his findings support the notion that individuals should care about low equality because as the top earners have gotten wealthier, the percent of the population in poverty. Kenworthy struggles to put forward an argument that shows how greater inequality is detrimental to economic growth. Kenworthy write that, “ high levels of inequality may be viewed by those at the middle and bottom of the income distribution as excessively unfair, thereby reducing worker motivation and workplace cooperation” (16). While this statement may sound like a plausible effect of high inequality, Kenworthy is only speculating and not supporting his statement with specific data. Could it be possible that due to inequality those in the lower classes have a greater incentive to work because they know that if they receive a promotion, their salary will grow substantially? This variable would also be quite difficult...
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...South Africa is considered an upper middle income country in terms of the World Bank tables but according to Wilson (2011:2) as well as Cornell and Wilson (2012:1) poverty in South Africa, despite its high income ranking, is widespread and severe. The only possible explanation for the contradiction in South Africa’s characteristics would be the deep levels of inequality experienced within the country (Wilson 2011: 2). This essay is going to prove, through looking at what poverty and inequality entail, how it originated in South Africa as well as evaluating statistical evidence, that inequality is indeed a more pressing socio-economic challenge than poverty is in contemporary South Africa. According to Laderchi, Saith and Stewart (2007:1) most policies now a days are somehow related to the impact of poverty on the country but in order for these policies to make a difference it is important to know what we are aiming at and therefore a clear understanding of what poverty and inequality is as well as where these terms originated from is essential for success. Laderchi, Saith and Stewart (2007) supply us with multiple approaches to poverty including the monetary approach, capabilities approach, social exclusion approach as well as participatory approach. Universally the monetary approach is dominantly accepted and used. This approach describes poverty as being a shortfall below a minimum level of resources or poverty line which is assessed through whether the individual can meet...
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...Globalisation has intensified inequality Globalisation has built a set of prospects for mainly large firms around the world with declines in tariffs or creation of free trade areas (Celik 2010). Although globalisation has increase economic growth substantially it does however also increase the economic and social gap within and between countries. Income inequality in particular is the effect of globalisation through foreign direct investment. According to the World Development Indicators 2005 (World Bank, 2005), the richest country Norway has a per capita income of $43, 400 whereas the poorest countries Burundi and Ethiopia have a per capita income of $90. These show the huge gap between the poorest and richest countries per capita income. These numbers raised the question “Has globalisation led to a greater income inequality or less?” In the article ‘Is globalisation reducing poverty and inequality’, Wade (2004) questions the empirical basis of the neoliberal argument. The neoliberal argument says that the distribution of income between the entire world’s people has become more equal over the past two decades and the number of people living in extreme poverty has fallen. It states that these progressive trends are due in large part to the rising density of economic integration between countries, which has made for rising efficiency of resource use worldwide as countries and regions specialize in line with their comparative advantage. This is partially true as...
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...Income inequality is a subject that most social science majors or people who deal with What is income inequality? According to McConnell and Brue, authors of Microeconomics the 14th edition, income inequality is "the unequal distribution of an economy's total income among persons or families.” Recently, studies have shown that income inequality has many connections that have caused the gap in the United States. According to the research I found, income inequality is connected to corruption, trade, wages of workers, and education. The world income inequality had declined since the twentieth century according to the studies found (Clark). Corruption falls increasing on low income individuals more than higher income individuals. Additionally, the trade theory suggests that the free trade might have level up the income inequality higher within countries by the different patterns of wages and demand for workers who are skilled and unskilled (Silva and Leichenko). Moreover, the education of wealthier people has it easier because the learning efforts of education are unbalanced. Besides, income inequality in the United States is hurting our economy due to the all the issues of corruption, trade, wages, and education. They also point out that some of the causes of income inequality are "differences in ability, education and training, discrimination, tastes, and risks.” As a whole we saw these factors very useful in explaining why it exists, but the problem with these is that they are...
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...Draft Why Income Equality is Important Arthur MacEwan[1] March 2009 “The social system is not an unchangeable order beyond human control but a pattern of human action.”—John Rawls (1971, p. 102) In recent years “poverty reduction” has become the watchword in development agencies, in international lending institutions, and among development economists generally. The focus on poverty reduction reached a high point perhaps with the articulation of the Millennium Development Goals (MDGs) and with the extensive analytic work that has accompanied the MDGs.[2] Yet, much of the discussion of poverty reduction and economic development in low and middle income countries has either ignored the issue of income distribution or has tended to view income distribution only in terms of its impact on economic growth. Poverty and inequality, however, are intimately bound up with one another.[3] Both as an analytic issue and as a policy issue, there are severe limitations in attempting to deal with poverty – or, more broadly, with economic well-being – without also examining income inequality. Indeed, it is questionable that we can even define poverty independently of income distribution. In this essay, I want to develop the argument that economists and economic policy-makers should focus much greater attention on inequality as measured by the distribution of income (and wealth). The traditional focus simply on absolute levels of income as a measure of poverty and economic...
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...Economic Inequality, an issue that has profound implications for both individuals and communities. Economic inequality refers to the uneven distribution of income and wealth within a population, and extreme inequality often leads to disparities in access to essential resources such as healthcare, education, and housing. In this reflection, I will explore how the challenge of reducing extreme economic inequality intersects with social welfare policy, analyze existing...
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...Examine the state and extent of poverty in the UK Absolute poverty measures the number of people living below a certain income threshold or the number of households unable to afford certain basic goods and services. Whereas, Relative poverty measures the extent to which a household's financial resources falls below an average income threshold for the economy. Although living standards and real incomes have grown because of higher employment and sustained economic growth over recent years, the gains in income and wealth have been unevenly distributed across the population. Poverty is caused by both a low real national income relative to a to a countries total population size and by inequalities in the distributions of income and wealth. The former leads to absolute poverty for most of a countries inhabitants, whereas the latter causes relative poverty. Discussions surrounding poverty in the United Kingdom tend to be of relative poverty rather than absolute poverty. The poverty trap affects people on low incomes. It creates a disincentive to look for work or work longer hours because of the effects of the tax and benefits system. For example, a worker might be given the opportunity to earn an extra 50 a week by working ten additional hours. This boost to his/her gross income is reduced by an increase in income tax and national insurance contributions. The individual may also lose some income-related state benefits. The combined effects of this might be to take away over...
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...and Rising Inequality in Australia Is Increasing Inequality Inevitable in Australia? Tom Conley Griffith University Introduction I want to dedicate my government to the maintenance of traditional Australian values. And they include those great values of mateship and egalitarianism.1 10 years ago a Mitsubishi type development would have flattened people psychologically. Now they take it in their stride … 2 Policy-makers and commentators have long been cajoling Australians into accepting that they are a part of the global economy, which means an acceptance of a whole range of ‘new realities’. One of the major themes of the pro-globalisation position is that Australia has accepted these new realities and adjusted well to globalisation by embracing economic liberalism. The results, it is argued, have been overwhelmingly beneficial. John Howard points out the Australian economy has grown for fourteen years straight – a remarkable achievement by any standards. This success story of growth has tended, however, to override more disaggregated, negative analyses of social outcomes in Australia. A less sanguine part of this new globalising ‘reality’ appears to be an acceptance of rising inequality. Indeed, it is often implied that rising inequality is a spur for growth. The argument is that everyone is better off, it’s just that some people are better off than others. While commentary is often not explicit about the association of globalisation and rising inequality, occasionally...
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...ESSAY Role of poverty benchmark as a component of equity and redistribution policy TABLE OF CONTENTS 1. Introduction 3 2. Absolute Poverty 3 3. Relative Poverty 4 4. Re-distribution of Income – Role of Poverty Benchmark in it 5 5.1 Education Policies 5 5.2 Taxation and Transfers 6 5.3 Minimum Wages 7 5. Drawbacks in using Poverty Benchmark for Redistribution Policies 7 6. Should Governments Focus on inequality? Or Poverty? My Reflections 8 7. Conclusions 9 8. Bibliography 9 Role of Poverty Benchmark as a component of Equity and Re-distribution Policy 1. Introduction How do you define poverty? It is a complex phenomenon influenced many factors. So there are many different ways to describe it. In general terms, idea of poverty is that if you can’t afford basic needs, you are poor. Yet, identifying such basic needs is bit complicated. Normally those are identified as items related to food, clothing and shelter. However, Amartya Sen (1983) states that basic needs are best understood capabilities such as to be free from decease, to travel; transportation, to be educated; schooling. Marshall Sahlins (1974) argues that poverty is a social status. When benchmarking poverty, there are two main classifications. Those are Absolute Poverty and Relative Poverty. Both of these types are based on income of the people rather than other social factors. ...
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...3. Economic growth is arguably a very important factor to eliminate poverty or reduce inequality. However, along with the creation of jobs and reduction in poverty, there has been evidence that suggests this is not always the case. E.g. Both China and India have witnessed widening inequality as their growth rates picked up over the 1990s (Department for International development). Economic growth will only reduce poverty if the wages of the lowest paid workers rise faster than the average wage rate and the growth increases job opportunities, which reduces unemployment levels, alongside a few more factors. Also, if everyone benefits and there is pro-poor growth, then EG will reduce poverty, which the Kuznets Curve demonstrates. This states that...
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...Anthony Giovenco Political Science Inequality Paper 12-18-14 The Effects of Wealth Inequality in the United States 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. There is no doubt that wealth inequality in America has been escalating quickly; the portion of total income earned by the top one percent has doubled since the beginning of the 1970’s. The wealthy are the main beneficiaries regarding income inequality. In the latest consensus of wealth distribution, the top one percent of Americans owned thirty five percent of the nations private wealth, and the top ten percent took home about fifty percent of all income in 2012. This figure is greater than the bottom 90 percent combined. The question commonly asked concerning this matter: How and why is this becoming so quickly unequal is to be examined. First, we must explain what is meant by the term “wealth.” Wealth is the collection of the assets people own. This includes homes, stocks, savings for pension, and bank accounts, minus all existing debts. The main issue regarding wealth inequality is income inequality. Income equality has grown increasingly in the past 30 years....
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...election of the US unemployment rate income inequality and shrinking middle class and poverty is becoming frequent words used by – unfortunately – some presidential candidate. In this paper we focus on poverty and workers. We try to investigate and explore the trend of poverty and income inequality in the US and among US workers. Everyone agrees that if a country bear a high unemployment or experience negative growth or steady and long term supply shocks, there is no surprise if we observe poverty. But if the country does not experience a high and increasing unemployment but increasing poverty and income-wealth inequality. If this is the case it means people in the country do work but become poorer and poorer....
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...Lien Centre for Social Innovation Social Insight Research Series Inequality, Poverty and Unmet Social Needs in Singapore A Handbook on A Handbook on Inequality, Poverty and Unmet Social Needs in Singapore Lien Centre for Social Innovation CATHERINE J. SMITH (Additional research and writing by John Donaldson, Sanushka Mudaliar, Mumtaz Md Kadir and Yeoh Lam Keong) As this handbook is intended to provide an overview of the arguments of others, the role of the authors largely consisted of compiling, arranging, and contextualizing. Further, the ideas expressed herein, which are various and often contradictory, do not necessarily represent the views of the handbook’s authors, or of the staff and Board of the Lien Centre for Social Innovation. Copyright © March, 2015 by Lien Centre for Social Innovation. All rights reserved. Published by the Lien Centre for Social Innovation Singapore Management University, Administration Building, 81 Victoria Street, Singapore 188065 www.lcsi.smu.edu.sg No part nor entirety of this publication may be reproduced or transmitted in any form or by any means, or stored in any retrieval system of any nature without the prior written permission of the Lien Centre. Readers should be aware that internet websites offered as citations and/ or sources for further information may have changed or disappeared between the time this was written and when it was read. Limit of Liability/Disclaimer of Warranty: While the publisher and authors...
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...Introduction In my final paper I will be discussing the health inequality in the social stratification in Canada and how our socioeconomic status can affect our health to be good or poor. Our health is determined by society and what level of power, authority and accomplishment that people achieve in the social hierarchy. In my essay I will be addressing and comparing the health inequalities people in different scale in the social economic face when it comes to income, education, housing, transportation, employment and health service. These are just the few things that effect our ability of achieve good health. I will also explain how race and immigrants can also determines inequalities, when it comes to their health, especially people of color...
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