Poverty and Income Inequality

Posted: December 22nd, 2022

Poverty and Income Inequality

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Poverty and Income Inequality

Introduction

One of the problems that is evident across the globe is that of income inequality, although the issue happens to affect more developing economies compared with developed states such as the U.S. Poverty and income inequality have caused distinctions bases on socio-economic status, thus creating the urge to understand the possible effects the disparity is likely to cause. Even though income inequality and poverty may not be a major concern for Americans born in the 1940s and the 1950s because the populations embraced the perception that people could elevate their lives by working hard, the younger population has to cope with the unequal economic distribution, which directly affects income (Ydstie, 2018). It is actually improper and unethical to have a society where only a small group of people enjoy massive wealth and higher pay while the majority languishes in poverty. More studies and research needs to happen to come up with effective ways of dealing with poverty and income inequality, which still derail the efforts to achieve equality.

Thesis Statement: Developing appropriate policies that advocate for sameness and creating more job opportunities will help address the problems of poverty and income inequality.

Annotated Bibliography

Boarini, R., et al. (2018). Reducing inequalities and strengthening social cohesion through

            inclusive growth: A roadmap for action. Economics, 12, 1-27.

The authors’ chief purpose is to illustrate how indulging people in decision-making as well as other critical practices aimed at developing the society may not only help to lower inequalities, but also strengthen social cohesion. Boarini et al. (2018) assert that growth and development does not only entail income, but about all applicable consequences of wellbeing and capacity to triumph the social problem of inequality. The investigators propose the adoption of integrated policy mechanisms that would help attain inclusive and equal growth and development. The policies, according to Boarini et al. (2018) need to impact on different areas such as private and public governance, fiscal plans, labor, and education to attain the most desirable outcomes.

Lederman, D. (2015). How does income inequality affect economic growth? Retrieved from

https://www.weforum.org/agenda/2015/07/how-does-income-inequality-affect-economic-

            growth/

Lederman’s article basically highlights how income inequality may affect the economy, and provides solutions that could help address the issue in the most amicable manner. Lederman (2015) reports of a study, which indicates that an increase in income inequality lowers GDP per capita, and specifically discovers that 1% point upsurge in the Gini coefficient lowers GDP per capita by about 1.2% within five years. The study elaborates how it is vital to deal with income inequality to overcome human capital-related challenges that still affect businesses, particularly in poor nations.

The author calls on the World Bank Group to put more effort in eradicating extreme poverty, as well as to work hard to boost the economies of developing nations by offering financial support to the most affected states. The World Bank needs to work closely with the International Monetary Fund (IMF) to overcome income inequality, and to help improve the GDP of poor economies. The article by Lederman (2015) adds onto the numerous studies that already advocate for eradication of income inequality if economic growth is to be achieved. Even though the article does not provide specific information how income inequality relates with poverty, the information that the situation affects the economy is enough to call on stakeholders to work towards achieving sameness, especially when it comes to payment.  

Ostry, J., Berg, A., & Tsangarides, C. (2014). Redistribution, inequality, and growth.

            Washington, D.C.: International Monetary Fund.

Ostry, Berg and Tsangarides conducts a study to find out how income inequality affects economic growth and deliver a finding that would significantly help to address the matter. The authors discover that politics plays a major role in promoting inequality, especially with regard to the formulation of policies that do not favor equality. The authors describe how societies that display more inequality are inclined to redistribute more, thus making it necessary to understand the link between growth and inequality to distinguish between net inequality and market. Ostry, Berg and Tsangarides (2014) further rule out that lesser net inequalities is largely connected with faster and durable development, a given measure of redistribution.

Ostry, Berg and Tsangarides present some suggestions that could go a long way in achieving a society where inequality in income does not continue to create division. They believe formulating policies that do not only protect the interest of the rich will be of great significance in restoring sameness. Other than the formulation of effective policies, Ostry, Berg and Tsangarides (2014) feel the government could be instrumental in overcoming income inequality by creating more job opportunities, and making the entry requirements favorable for the applicants. The writers believe that unless a nation adopts such effective measures it would continue struggling with the problems that come as a result of unequal pay among nationals.

Siddique, H., Majeed, M., & Shehzadi, I. (2019). Impact of political instability on economic

            growth, poverty and income inequality. Pakistan Business Review, 20(4), 825-839.

Siddique, Majeed and Shehzadi main objective is to assess the effects of political instability on the economic growth and development, income inequality, as well as poverty. The investigators acquire data dating 1984-2011, and discover how political instabilities such as bad governance, poor legislations and attempted coups derail the attempts to overcome income inequality and poverty. Siddique, Majeed and Shehzadi (2019) concur with other researchers on the fact that adopting frameworks that foster political stability and creating policies to tackle unequal distribution of resources may present the chance to overcome the socioeconomic problems of poverty and income inequality.

Ydstie, J. (2018). The American Dream is harder to find in some neighborhoods.  Retrieved from

https://www.npr.org/2018/10/01/649701669/the-american-dream-is-harder-to-find-in-

            some-neighborhoods

Ydstie’s primary purpose is to find the relationship between a person’s likelihood of achieving the American Dream and where they are raised. Ydstie refers to a study by Raj Chetty who is an economist professor at Harvard University, and who together with other investigators acquire classified data from the Internal Revenue Service and U.S. Census Bureau. Other than learning that people born in the mid-1980s are less likely to attain the American Dream as it would happen with older people born in the 1940s and 1950s, Chetty and his team discover community hurdles present numerous obstacles that bar people from ascending the economic scale. The inquiry reveals how a person increases their chances of gaining more income by relocating to a neighborhood with promising prospects (Ydstie, 2018). An option Chetty and his team recommends is to improve legislations such that all neighborhoods experience equal distribution of resources, and to promote equality starting from young age. Charlotte, specifically Mecklenburg County is already leading the way by offering pre-K for all younger ones, and the city has dispatched $50 million to facilitate reach to affordable housing.  

References

Boarini, R., et al. (2018). Reducing inequalities and strengthening social cohesion through inclusive growth: A roadmap for action. Economics, 12, 1-27.

Lederman, D. (2015). How does income inequality affect economic growth? Retrieved from https://www.weforum.org/agenda/2015/07/how-does-income-inequality-affect-economic-growth/

Ostry, J., Berg, A., & Tsangarides, C. (2014). Redistribution, inequality, and growth. Washington, D.C.: International Monetary Fund.

Siddique, H., Majeed, M., & Shehzadi, I. (2019). Impact of political instability on economic growth, poverty and income inequality. Pakistan Business Review, 20(4), 825-839.

Ydstie, J. (2018). The American Dream is harder to find in some neighborhoods.  Retrieved from https://www.npr.org/2018/10/01/649701669/the-american-dream-is-harder-to-find-in-some-neighborhoods