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Income Inequality and Poverty

The problem of income inequality is one of the oldest. This problem gives rise to social tension, and to put it simply, hostility of the poor towards the rich. Therefore, economic science is constantly engaged in the study of inequality and its negative effects, as well as the development of measures for its reduction.

This problem has two facets:

• Income inequality.

• Inequality of wealth.

People get income as a result of offering their factors of production (labor, capital, land) for use to firms for the production of goods for people or put these resources to create their own businesses. This mechanism of formation of income initially leads to the possibility of inequality.

The reasons for this situation are the following:

• Different value of the factors of production (capital in the form of a computer, in principle, can bring more income than capital in the form of a shovel).

• Different success of use of production factors (a worker in a company, which produces a scarce commodity, may have a higher salary than a colleague of the same qualification, working in the company, whose products are sold with difficulty).

• Different amount of the production factors (the owner of two oil wells receives more revenue than the owner of one well).

Inequality of income and wealth can reach enormous proportions and pose a threat to the political and economic stability in the country. Therefore, almost all developed countries are constantly implementing measures to reduce such inequalities. But the development of these measures is possible only with the ability to accurately measure the degree of differentiation of income and wealth, as well as its effects with the help of state policy.

Excessive income inequality not only adversely affects the quality of life of people, but is also responsible for a large share of poor people in the country.

Poverty is an extreme deficiency of a person or family in funds or goods needed for a normal life and activities. Poverty threshold is a level of cash income established by regulations for a certain period, which provides physical and living wage. There is absolute, relative, and subjective poverty. Absolute poverty is defined when the income level of a person, family, or group does not provide the purchase of essentials goods in accordance with the regulations. Relative poverty is the lack of a decent income in comparison to other members of society. Subjective poverty is an assessment by a person of their well-being in terms of whether their income allows them and their family live in dignity.

The problem of income inequality is one of the oldest. This problem gives rise to social tension, and to put it simply, hostility of the poor towards the rich. Therefore, economic science is constantly engaged in the study of inequality and its negative effects, as well as the development of measures for its reduction.

This problem has two facets:

• Income inequality.

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Assignment ID
100002962
Discipline
Type
CREATED ON
November 7, 2016
COMPLETED ON
November 8, 2016
Price
$42
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Essay Example Comments
judy.washington4646
October 29, 2016
judy.washington4646
great job
CandiceM
October 26, 2016
CandiceM
Great Job! Will order again. Thanks!
judy.washington4646
October 24, 2016
judy.washington4646
great job