The role that income inequality plays in economic growth has also received quite a bit of attention in policy circles and the press recently. The IMF has weighed in with a discussion on the role of income distribution as a cause and consequence of economic growth see, for example, Ostry et al.
Hodgson At least nominally, capitalism embodies and sustains an Enlightenment agenda of freedom and equality. Typically there is freedom to trade and equality under the law, meaning that most adults — rich or poor — are formally subject to the same legal rules.
But with its inequalities of power and wealth, capitalism nurtures economic inequality alongside equality under the law.
Today, in the USA, the richest 1 per cent own 34 per cent of the wealth and the richest 10 per cent own 74 per cent of the wealth. In the UK, the richest 1 per cent own 12 per cent of the wealth and the richest 10 per cent own 44 per cent of the wealth.
In France the figures are 24 cent and 62 per cent respectively. The richest 1 percent own 35 percent of the wealth in Switzerland, 24 per cent in Sweden and 15 percent in Canada. Although there are important variations, other developed countries show similar patterns of inequality within this range.
Using data from twenty-three developed countries and from the separate states of the United States, they observed negative correlations between inequality, on the one hand, and physical health, mental health, education, child well-being, social mobility, trust and community life, on the other hand.
They also found positive correlations between inequality and drug abuse, imprisonment, obesity, violence, and teenage pregnancies. They Inequality and its effects in the that inequality creates adverse outcomes through psycho-social stresses generated through interactions in an unequal society.
Although economic inequality is endemic to capitalism, data gathered by Thomas Piketty in his Capital in the Twentieth Centuryand in my book entitled Conceptualizing Capitalismshow that there are large variations in measures of inequality in different major capitalist countries, and through time.
The existence of such variety within capitalism suggests that it possible to alleviate inequality, to a significant degree, within capitalism itself. But first we must be clear about the drivers of inequality within the system. What are the mechanisms within capitalism that exacerbate inequalities of income or wealth?
Some inequality results from individual differences in talent or skill.
But this cannot explain the huge gaps between rich and poor in many capitalist countries. Much of the inequality of wealth found within capitalist societies results from inequalities of inheritance. The process is cumulative: To what extent can inequalities of income or wealth be attributed to the fundamental institutions of capitalism, rather than a residual landed aristocracy, or other surviving elites from the pre-capitalist past?
A familiar mantra is that markets are the source of inequality under capitalism. Can markets be blamed for inequality? In real-world markets different sellers or buyers vary hugely in their capacities to influence prices and other outcomes. When a seller has sufficient saleable assets to affect market prices, then strategic market behaviour is possible to drive out competitors.
Would more competition, with greater numbers of market participants, fix this problem? If markets per se are to be blamed for inequality, then it has to be shown that competitive markets also have this outcome.
Unless we can demonstrate their culpability, blaming competitive markets for inequalities of success or failure might be like blaming the water for drowning a weak swimmer. To demonstrate that competitive markets are a source of inequality we would have to start from an imagined world where there was initial equality in the distribution of income and wealth, and then show how markets led to inequality.
I know of no such theoretical explanation. Markets involve voluntary exchange, where both parties to an exchange expect benefits. One party to the exchange may benefit more than the other; but there is no reason to assume that individuals who benefit more, or benefit less in one exchange will generally do so.
And if some traders become more powerful in the market than others, then its competitiveness is reduced. There is another reason why it is a mistake to focus on markets. In the sense of organized arenas of exchange, markets have existed for thousands of years. We need to look at new institutional drivers of inequality that became prominent in the last years or so.
These new institutional changes were additional to markets. The sources of inequality within capitalism So if markets per se are not the root cause of inequality under capitalism, then what is?Inequality could impair growth if those with low incomes suffer poor health and low productivity as a result, or if, as evidence suggests, the poor struggle to finance investments in education.
Economic inequality is the difference found in various measures of economic well-being among individuals in a group, among groups in a population, or among lausannecongress2018.comic inequality sometimes refers to income inequality, wealth inequality, or the wealth lausannecongress2018.comists generally focus on economic disparity in three metrics: wealth, income, and consumption.
Gender Inequality in the World and Its Implications Cornhusker Economics January 14, Gender Inequality in the World and Its Implications Worldwide one in three women will be abused sexually or will encounter physical violence during her lifetime (Human Development Report (HDR), ).
Income inequality is crippling and dangerous to our country and every country. The good news is that it doesn't matter how you close the wealth gap, through taxes, like Nordic countries, or by.
Please cite this paper as: Cingano, F.
(), “Trends in Income Inequality and its Impact on Economic Growth”, OECD Social, Employment and. The award-winning Black Wealth / White Wealth offers a powerful portrait of racial inequality based on an analysis of private lausannecongress2018.com Oliver and Thomas Shapiro's groundbreaking research analyzes wealth - total assets and debts rather than income alone - to uncover deep and persistent racial inequality in America, and they show how public policies have failed to redress the problem.