Over the last few decades, the level of economic inequality has significantly increased, especially in the OECD countries (John 7). Essentially, the top earning population has acquired a large share of the overall gains in income. Fundamentally, there has been an increasing consensus that major assessment on the level of economic performance should not be based solely on income growth, but the distribution of income. Such assessments are highly concerned with the level of both economic and income inequality.
Economic inequality measurements have numerous dimensions, and economists view it in terms of monetary assessments related to incomes for individual and households. Other dimensions link economic inequality with inadequate skills, low level of education, opportunities, and assets. As a measure of a countries level of economic inequality, the per capita GDP is usually applied. Often, one of the applied measurements of economic inequality is the Lorenz curve and the Gini Coefficient, usually calculated in of a ratio (Darkwah 3). A high Gini coefficient indicates a more uneven level of income distribution (Darkwah 3).
In particular, when assessing the level of economic inequality, we consider the gap that exists between rich and poor. According to world distribution of income, reducing this gap entails the process of reducing the global poverty rate by reducing the number of people below the poverty level of $ 1.00 per day (Sala-i-Martin 358). In this paper, we analyze the causes and analysis of economic inequality. This section discusses various factors that increase the level of income distribution between the rich and the poor. Next, the paper will explain various solutions that can help reduce this economic equality.
Causes and Analysis
In examining structural issues on the rich-poor gap, the aspect of racial differences that may cause inter-racial discrimination plays a crucial role. There is a direct correlation between African-Americans and poverty-related factors such as spatial mismatch, social isolation, family structure, labor discrimination and inner-city education (Williams 168). Most African-Americans face poor quality education, which discourages academic achievements and attainment of school. The aspect of racial discrimination is also experienced in urban neighborhoods during job seeking. Most African-Americans are likely to get low paying jobs even when they are highly qualified. Also, studies have shown that a specific pattern is displayed in job seeking: while Americans are more likely to get jobs through family and some personal connections, African-American are likely to use formal channels. These aspects reduce the likelihood of the African-American to live quality lives and increase their poverty rates.
The aspects of behaviors, attitudes and choices of the society may also have an impact in influencing the level of economic inequality. According to the theory of intergenerational transmission of poverty, the behaviors and attitudes set in the families may create a culture of poverty as a way to cope with low economic means (Bird 28). Such choices and attitudes are manifested in the attainment of a low level of education as well as in family structures. Essentially, family structure characteristics including out-of-wedlock child births, not attaining education, and low level of work-experience impact significantly on poverty and low income earning in the society (Biosjoly et. al. 468).
Demographic factors also play part in the rich-poor gap, and entail the processes of population development that include the age structure and the population growth density. These factors influence the number of the economically active population, its level of urbanization as well as the level of human capital, which includes education and health condition. For instance, inequality levels are likely to be higher in countries where the age structure is composed of a small share of the population that is economically active. Equally important, the level of human capital, mainly its education progress is a crucial factor. For instance, nearly 50 percent of children in the U.S born to low-income parents are likely to be low-income adults (Feldman 154).
Historical, cultural and natural factors are also of great impact, and they include the aspect of availability and distribution of land resource and the attitude of people to inequality. Studies show that countries endowed with natural resources are likely to have a high level of inequality due to high capital-based technology, which reduces the need for unskilled labor. Certainly, inequality is higher in the countries where historical land and wealth is owned by a small group of the population (Janmaat 184). Fundamentally, cultural factors that have subjected women to early marriages and prevented them from pursuing their education have had a significant impact on economic inequality. Such cultures prevent women from contributing to income generation for their families.
Solutions to the Rich-Poor Gap
Efforts to reduce economic inequality that occurs as a result of racial discrimination can be achieved through policies like anti-discrimination laws. Major steps can be made to ensure that state government programs, grants, and contracts are awarded purely on merit. Also, government employment laws must inculcate policies that make hiring decisions on a fair basis without discriminating certain races (Spakovsky, and Roger 4). Also, promoting tertiary institutions for minority students will not only allow them to pursue high-prestige careers and better-paying jobs; it will also ensure diversity of the American society.
Another solution to this vice is to improve the quality and access to education. Analyses have shown that an increase in the share of people with a high level of education results in a reduction in labor earning inequality (Nomura 627). Thus, education promotes human capital, which improves the people’s living standards and reduces inequality in the labor income. Some of the policies to improve the level of education may include enhanced accountability for schools, special financial support to assist students whose parents have low income and encouraging students to pursue tertiary learning.
It is imperative to motivate behavioral change in the society. However, changing the behavior, attitudes and choices is not an easy task. Ideally, by adopting an efficient behavior change process, the society can eradicate the perception of choice of poverty. Motivating these changes can be approached from a complex web of societal aspects ranging from personal or individual beliefs, knowledge, and skills, social interaction, and environmental factors such as education access. These interventions will aim at changing the culture of poverty in the society. Sociologists argue that reducing social welfare benefits to the poor members of the society can inculcate the culture of hard work and eradicate underclass attitudes that contribute to their low-income status.
Additionally, it is undeniable that women bear more caring role and responsibilities as compared to men. This aspect makes them work for fewer hours, which results in less pay. New policies should be formulated to enhance the availability and access to formal children care. These policies will significantly prevent gender differences, especially in total working hours and reduce the extent to which hourly payments are affected. Also, it will promote living standards in the long run by enhancing higher rates of participation. In one of the case studies, the creation of Quebec low-fee childcare program increased the number of women employment by about 3.8 percent (Lefebvre et al. 492).
Sociological theories argue that economic inequality has been transferred through generations not because of inherited intellectual failings but because of lack of distributive welfare systems. Sociologists argue that concept of social capital extends that aspect that family and community resources influence their chances of acquiring financial resources and education. Thus, an equitable resource distribution would help to empower these societies, thus reducing the inequality (Coleman, 19). The policy program should develop a clear system that aims to redistribute the wealth and resources to the societies where it is most needed. It should also create a monitoring element that determines specifically those who benefits from any particular service or expenditure.
Conclusion
Basing from our arguments, we can deduce that the level of economic inequality is affected by factors that reflect on the racial differences and behaviors, attitudes and choices. Also, economic inequality is affected demographic aspects like population growth and density, as well as historical and natural factors. Ideally, with efficient reforms and policies, economic equality can be achieved, and the rich-poor gap will significantly reduce. Such reforms and policies would entail eradicating discrimination, improving the quality and access to education by the poor, promoting economic empowerment of women, motivating behavior change, as well as social capital support mechanism that promotes equitable growth. One of the crucial concerns is whether the policy reforms that have been advocated to enhance growth will be implemented efficiently to promote economic equality.
Works Cited
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