Section A
In the US, the income level is unevenly distributed due to several factors. The first factor is education. Due to industrialization and growth of the private sector in the US, there is high demand for highly skilled labor in terms of academic qualifications. Therefore, individuals with Bachelor’s Degrees are preferred to those who have a college degree (Weissman, 2012). The level of certified expertise becomes a critical determiner of the job entry level and chances of upward mobility. Due to this factor, income inequality between the highly qualified professionals and the average working class is high. As the working life of these two classes of workers in the US stretches, so does the income inequality.
The other reason is racial disparities. Asian Americans, for instance, earn at least 5% higher than the other Americans (Weissman, 2012). This is attributed to their efforts in school and the extra work hours at the workplace. On the other end employers will hire Whites as opposed to Black Americans for a similar position especially in white collar jobs. Ethnic stereotyping is responsible for this discrimination. Finally, taxation accounts for income inequality. As long as the progressive tax rate in the US is minimal, the after tax income inequality will be prevalent (Weissman, 2012). Therefore, the upper income class will save a high fraction of their incomes than the poor individuals.
Section B
Income mobility is affected by factors such as tax credits and tax rates. For the poor, tax credits improve their savings while high tax rates for the rich reduce their proportion of savings (Corak, 2004). Therefore, when the poor save a high fraction of their incomes, there are high chances of improving their net income levels and hence their upward income mobility rate increases. On the other hand, high tax rates for the rich imply that their downwards income mobility will increase. The other factor is the size and the dispersion of the middle class. Upward income mobility is high in metropolitan areas where the poor families are distributed evenly among the mixed income neighborhoods (Corak, 2004). For the poor families, there are high chances of tending to emulate their high income neighbors. In addition, income chances for the poor are likely to crop up due to employment by the high income families.
Another factor that is responsible for income mobility is the prevalence of two parent households and high quality elementary schools. In the US, such families have relatively higher income than one parent households. High quality elementary schools provide a solid educational background for school going children. As a result, high chances of upward income mobility emerge in their working lives owing to possession of top skills (Corak, 2004).
Section C
Despite growth in poverty, redistribution is not supported due to a number of factors. The first is that it goes against incentives. In the event of income redistribution, individuals will not take risky jobs or those that call for extra work (Pearson Education Inc., 2010). Since compensation is based on marginal productivity, incentives will discourage individuals from taking courses to improve their skills and their marginal productivity, consequently. Therefore, income redistribution results in an overall decline, in productivity. The other point is that income redistribution is deemed as unfair. It involves taking funds from one end of the spectrum and giving it to the other end (Pearson Education Inc., 2010). As a result, the high income individuals see it as an unfair hand out of property to individuals who do not devote work efforts like they make.
References
Corak, M. (2004). Generational Income Mobility in North America and Europe. Cambridge: Cambridge University Press.
Pearson Education Inc. (2010, July 18). The Redistribution Debate: Arguments Against Redistribution. Retrieved from http://wps.prenhall.com/bp_casefair_econf_7e/30/7935/2031475.cw/index.html: http://wps.prenhall.com
Weissman, J. (2012). U.S. Income Inequality: It's Worse Today Than It Was in 1774. The Atlantic, 23-26.
