Examples Of Income Inequality

Income inequality is one of the big issues in 21st century. Unequal distribution of income in society is considered to be an obstacle to economic growth. The income allocation of a country’s population can be measured by a Gini coefficient. The value of Gini coefficient can be between 0 and 1 and used to define the income gap between the rich and the poor. The value 0 shows perfect equality and value 1 illustrates perfect inequality. The US can be an example of country with high income inequality. The US Gini coefficient has risen by 20% between 1979 and 2010 (Frizell, 2014). Factors like family structure (i.e. how many earners are there in family), technology (i.e. changes the way that we live), and immigration (i.e. changes the supply of

One example of inequality in the US is black-white income inequality which still exists in the US. The income difference between median households of white and black has increased from $19,000 in 1967 to $27,000 in 2011. The average black household income composed 59% of average white household income in 2011, these percentage was equal to 55% and 63% in 1967 and 2007, respectively (Desilver, 2014). If discrimination because of skin color will be continued they will harm economy in some way because if these people will not have jobs they will increase the proportion of unemployed people in the country. The unemployment rate of black is two times greater than unemployment rate of white (Fields and Weller, 2011). In 2011, the black unemployment rate was equal to 16.1 percent, while it was just 7.9 percent for whites (Fields and Weller, 2011). Schnurer (2014) states that “Giving more people a shot at economic success produces greater gains for society because more people are contributing”. According to World Bank research findings the main reason for languishing economy in Arab countries is exclusion of women from economic contribution (Schnurer, 2014). The second example of unequal distribution of income in the US is inequality between income of college graduators and non-college graduators. American company the Rating agency Standard & Poor’s (S&P) describes greater educational levels as a main means to increase productivity, arguing that if workforce in America completed another one more year of school in coming next five years’ time period, productivity profits would be able to add more than $500 billion, which is equal to the 2.4% of GDP (Frizell, 2014). It can be seen from this data that higher educational level means higher payments for labour. The difference between US social classes’ incomes can be an example for that. According to 2009 data the people with professional degrees