The Impact of Economic Inequality
The issue of economic inequality is a pervasive phenomenon that has for long concerned nations across the globe.
The global call and action to eradicate inequality – in its various forms – is not only one that is necessary to address the common ideals of fairness, justice and human dignity but also societal wellbeing and economic progress.
The Benefits of Economic Equality
While the promotion of economic growth and development is a key objective for many economies, research evidence has shown that economic growth may at times result in greater income inequality and, for some emerging economies, this could also lead to greater gender inequality. Greater economic equality, on the other hand, is typically synonymous with efficient, inclusive and sustainable development but may not always lead to higher economic growth. The implication of which is that economic growth and equality can often be mutually exclusive goals if not considered in tandem.
Looking at the case of gender inequality as an exemplar form of inequality, it is reasonable to expect that owners of capital and businesses, with the goal of maximising profits, may favour a lower wage position for women, as this will imply a reduction in their labour costs. If unchecked, this could cause gender wage inequality to persist. It is therefore reasonable to expect governments’ intervention in this terrain to ensure fairness in the wage-setting process and improvement of women’s access to formal education which improves their bargaining power.
Economic Inequality is Rising
The figures below depicts the rising trend in the incomes of the top 1% and the falling income shares of the bottom 50% in three top economies. It is evident that the gap between the rich and the poor appears to have been widening in the past decades.
Top 10% and Bottom 50% national income shares for the UK, the USA and Germany, 1980 – 2017
We hope this article has added to your growing knowledge about the inequality of wealth, and that it raised some useful questions.
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