Equitable Distribution of Income

Table of Content

Economic inequality has various manifestations. These including lack of income and productive resources sufficient to ensure sustainable livelihoods; limited access to education and other basic services; increased morbidity and mortality from illness. Lack of participation in decision-making and in civil, social and cultural life also attributes to it. It is every where, both in developing countries in developed countries. Women bear a disproportionate burden of inequality, and children growing up in extreme inequality are often are the victims.

Older people, people with disabilities, indigenous people, refugees and internally displaced persons are also particularly vulnerable. Furthermore, inequality in its various forms represents a barrier to communication and access to services, people are particularly vulnerable to the consequences of disasters and conflicts. Unsustainable consumption and production patterns are contributing to the unsustainable use of natural resources and environmental degradation, as well as to the reinforcement of social inequities.

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With increasing population, the numbers of youth living in poverty will increase significantly. Therefore, specific measures are needed to address the juvenilization and feminization of inequality. The rich are getting richer while the poor remain poor. If you doubt it, ponder these numbers from the US, a country widely considered meritocratic, where talent and hard work are thought to be enough to propel anyone through the ranks of the rich. In 1979, the top 1% of the US population earned, on average, 33. 1 times as much as the lowest 20%. In 2000, this multiplier had grown to 88. . In 1897, a Paris-born engineer named Vilfredo Pareto showed that the distribution of wealth in Europe followed a simple power-law pattern, which essentially meant that the extremely rich hogged most of a nation’s wealth (Jenny Hogan, 2000). Now it seems that while the rich have Pareto’s law to thank, the vast majority of people are governed by a completely different law. In general, the Census figures appear lucid and easily understandable. However, the conventional Census data are marred by four problems that lead to an overstatement of the level of economic inequality:

Conventional Census income figures are incomplete and omit many types of cash and non-cash income. The conventional Census figures do not take into account the equalizing effects of taxation. The Census quintiles actually contain unequal number of persons, a fact that greatly magnifies the apparent level of economic inequality. Differences in income are substantially affected by large differences in the amount of work performed within each quintile, yet these differences in work effort are rarely acknowledged (Robert Rector and Rea Hederman, Jr. , 2004). In 2002, the Census reported that the top or most affluent quintile had 49. percent of income, while the bottom quintile had only 3. 5 percent. Thus, the top fifth of households is shown to have 14. 3 times more income than the bottom fifth. (Bernadette D. Proctor and Joseph Dalaker, 2002) A similar picture emerges in Canada, another developed country. In 1991, Families accounted for about $388 billion. Top quintile families have 39. 9% of total income while the bottom quintile families have 6. 4%. An interesting trend revealed by the data is the polarization of market incomes into high and low incomes. The bottom three quintiles received less of market income, while the top two quintiles received more.

The top two quintiles received 63. 0 per cent of total market income in 1981 and 67. 5 per cent in 1991. This hollowing out of the middle, with greater concentration at both extremes, is a worrisome trend associated with the so-called good and bad jobs generated by the new economy. The effects of this polarization are not felt as seriously as they could because tax and transfer policies moderate the underlying unequalizing market forces. When underlying market forces tend to produce a more unequal distribution of income, government policies must assume more of the load to ensure a more equitable income distribution.

In this situation, government programs are figuratively operating on a treadmill – extra taxes and transfers are required each year simply to maintain the same distribution of disposable income. Nevertheless, the bottom three quintiles did not stand their ground during the decade, but rather lost income shares. One of the purposes of government taxes and income transfers is to reduce poverty. In fact, this appears to be the case in nine countries examined, although the impacts are widely divergent (Ross et al. , 1994) Productivity growth has always been seen as perhaps the single most important indicator of rising, broad-based prosperity.

But remarkable growth in top-end pay, together with the relative constancy of labor’s overall share of income, has an obvious implication: the highest earners are now capturing most of the gain in national income caused by economy-wide productivity growth. Historically the raising productivity has raised the economic standards and has resulted in broad-based prosperity. But remarkable growth in top-end pay, together with the relative constancy of labor’s overall share of income, has an obvious implication: the highest earners are now capturing most of the gain in national income caused by economy-wide productivity growth.

CEOs are one of the highest paid people of the industry. The share holders should take appropriate steps to check this exponential growth of incomes at higher levels of the industry (Clive Crook, 2006) A leading suspect in the economic structure is the labor market. Almost a quarter of full time workers in Canada earn less than two thirds of median earnings. The low wage economy is undoubtedly a major flaw in the social structure. One must note that the post industrial economies are knowledge based economies. There is a raising demand for educational credentials and it affects women as much as men.

High female employment has been a defining feature of the post industrial world. In Europe, the difference in earnings between different professions is relatively low. This effectively results in little differences in the standards of living of different groups of people. A large number of firms habituated to a low-wage, low-productivity equilibrium. This could reflect the presence of a large pool of low-skilled workers, a large number of jobs that are undercapitalized, or some mix of the two. In either case, it is undesirable for both economic and social reasons (John Myles, 2005).

While it is not and should not be the goal of any government to pull down the faster growing group of population to drop their pace to match the poor, they should make every effort to reduce the gap between rich and the poor. It is a known fact that the gap can never be zero because of different factors. To minimize economic inequality, equality of opportunity should be there, not greater equality of income and living conditions. The equality of opportunity would also leave intact and legitimate the neoliberal system of inequality.

Equality of opportunity might reduce the likelihood that each generation would end up where their parents were, but society would still be growing more economically unequal. The governments should take active part in identifying the livelihood systems, survival strategies and self-help organizations of people living in poverty and should work with such organizations to develop programs for combating poverty that build on their efforts, ensuring the full participation of the people concerned and responding to their actual needs.

It should establish policies, objectives and measurable targets to enhance and broaden women’s economic opportunities and their access to productive resources, particularly women who have no source of income. It should try to eliminate the injustice and obstacles that women are faced with, and encourage and strengthen the participation of women in taking decisions and in implementing them, as well as their access to productive resources.

The poor should be given opportunities to involve in the setting of targets and in the design, implementation, monitoring and assessment of national strategies and programs for poverty eradication and community-based development. People living under poverty should be encouraged to organize into groups so that their representatives can participate in economic and social policy-making and work more effectively with governmental, non-governmental and other relevant institutions to obtain the services and opportunities they need.

Basic education should be given to all the people and people should be educated about their rights, the political system and the availability of programs. Public awareness should be brought, in particular through educational institutions, non-governmental organizations and the media, to enable society to prioritize the struggle against economic inequality, while focusing attention on progress or failure in the pursuit of defined goals and targets.

Inequality can also be addressed by promoting and strengthening micro-enterprises, new small businesses, cooperative enterprises, and expanded market and other employment opportunities and, where appropriate, facilitating the transition from the informal to the formal sector. Economic inequality has been in existence for a long time. It has to be accepted that there is a large gap between the rich and poor. We can only try to reduce the gap, but can never make it zero. The government should make continuous efforts by implanting various programs like the ones cited above which would ultimately reduce the gap between rich and poor.

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Equitable Distribution of Income. (2017, Mar 27). Retrieved from


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