Income Distribution

How would you define income inequality? How is income inequality measured? What has happened to income inequality in the United States since the end of the Second World War in 1945? What evidence can you provide to support your answer? What are the reasons for the changes in income inequality since 1945.

Suggestion: Click here to view the documentary film Inequality for All. You can also examine the “Graphics Package” that includes informative graphics from the film. Take a look at those. Summarize what you learn, and share your thoughts. These do not have to be part of your response, but may be some things to consider.

Submission Requirements:The discussion grade will be based on how thorough and detailed your posts are.
Your initial post should be substantial, and answer the question(s) in detail

ANSWER

Income Inequality

Income inequality entails how unevenly income has been distributed throughout a population. Income inequality is the measure that indicates the gap amid different household’s disposable income in a specific year. Income inequality has been present in the current society due to differences in race, gender, education, among other factors. Widening income inequality has been linked to significant effects on growth and macroeconomic stability, and health and social issues.

Measuring Income inequality

There are varying measures of income disparity. The most commonly utilized measures comprise of the Gini coefficient, the Lorenz curve, the Palma ratio, the Theil index, and the Decile ratios. Decile ratios are one of the simple but most effective approaches to survey income disparity. The calculation is carried out by taking income for the top 10% of households and dividing the earnings earned by 10% of the most impoverished families.

Income inequality in the U.S since 1945

Income inequality has risen in the United States since the end of the second world war. Current studies have indicated that trade, technology, and institutions have been the explanatory causes of rising income inequality. The country’s Gini index that measures income inequality has been steadily increasing over the years. Most of the reasons for United States income disparity can be linked to the global economy’s fundamental shift. The fundamental causes of income inequality in the United States are economical and technological. Skill-based technological change has also been a common explanation for income inequality in the United States. For instance, changes in production technology have influenced income distribution due to its skilled biased nature. This is because automation and computerization have eliminated jobs among Americans. Rising income inequality in the United States since 1945 has been linked to critical factors affecting earning, such as technology and globalization as the underlying sources of income inequality.