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Top 5 Causes of Income Inequity

by GBAF mag
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Current literature largely attributes three primary causes of rising income inequality and falling wages: technological change, international trade, and institutional factors. However, the existence of several other explanations points toward the difficulty of identifying causal agents for income inequality. Moreover, alternative theoretical perspectives on how people gain and maintain income provides an even more perplexing problem for social scientists. This article therefore explores the causes, effects, and solutions of income inequality using theoretical models and decades of empirical research.

Technological change is one of the simplest theories to describe. As information technology has continued to advance, technical colleges have expanded, providing higher education for a broader range of workers and increasing demand for highly skilled professionals, such as nurses and other health care providers. Because education levels tend to peak at about age 25, the supply of highly educated people (including nurses) is particularly high; hence, the supply of high-quality jobs in the health care industry drives up wages.

Technological change can also be blamed for income inequality via international trade. As technological advances enhance international competition, developed countries increasingly pursue economic expansion, leading to slower domestic growth and slower wages. In response, developing countries increase their purchases of advanced goods, driving down the cost of goods that they produce and lowering the cost of imported goods. A trickle of money trickles down to workers in the U.S., allowing them to purchase more items and earning a higher minimum wage because employers are often willing to pay a little more to employees if they have the skills that employers are willing to pay them. This form of international economic inequality is sometimes referred to as the “trickle-down effect of technology.”

Finally, institutional factors account for a portion of the income inequality experienced by the United States and most other developed countries. Institutional differences between households means that households in the United States differ significantly in both the amount they earn and the means they choose to obtain that earnings. Unlike some other countries, the United States does not restrict the size of household income as it relates to family size. As a result, some families live in extreme poverty, while others are very wealthy. The degree to which income inequality occurs, therefore, is driven by institutional factors.

By analyzing the level of income inequality within the United States, you can begin to understand how income and wealth are distributed. You can also begin to understand how changes in societal norms and policies affect income inequality. You can also learn about the nature of economic rents – the difference between what you pay for a living and what the rich pay for the same living. This enables you to see the world through the eyes of the very richest 1 percent. It enables you to see what changes in the distribution of income will have the greatest effects on people and the economy.

As you may be aware, income inequality is a persistent problem in the United States. It has been a persistent problem since the country was created and it is likely to be a persistently problematic problem in the future. One of the most important reasons for this is the difference in distribution of productivity between the rich and the poor. The difference in productivity is one of the leading causes of income inequality, because the incomes of the poor are much lower than those of the rich.

In addition to having very low wages, the bottom 10 percent of earners in the United States have even lower annual incomes. The income inequality experienced by America’s poor is the highest of all countries in the developed world. The poor of the United States are also the most politically disadvantaged. The people of the United States are among the most unequal country in the developed world.

A number of forces account for income inequality in the United States. One of these forces is globalization. The rapid expansion of the Chinese economy has reduced the price advantage that U.S. businesses enjoy over those of other countries. This has led to a rapid increase in the price of goods manufactured in the United States, as well as to an overall reduction in the value of the dollar. Globalization has also resulted in a concentration of wealth at the upper levels of the income hierarchy, which is also playing a significant role in the increasing U.S. income inequality.

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