Impacts of Economic Inequality
Economists have different opinions on the effect of economic inequality, which can be both positive and negative. Some economists conclude economic inequality stimulates growth, improves living standards, and facilitates social progress. Other experts believe that economic inequality causes wealth accumulation in the hands of few people, exploitation of disadvantaged populations, and hinders economic growth. The advantages and disadvantages of economic inequality are explained as follows:
Positive Impact
Economic inequality drives growth in a variety of ways. In this condition, motivation is higher for innovation and entrepreneurship, which offers incentives for growth and higher income. The low-income groups of society put more effort, are involved in new ventures, or explore new avenues for growth opportunities to become members of the high-income group.
Negative Impact
High levels of economic inequality cause unequal income distribution and poverty. It affects the affordability of health and education facilities, causes limited employment opportunities, and increases associated crimes. Income inequality may lead to political instability, increase the risk of corruption, and discourages capital accumulation. Fewer individuals have funds and become privileged to access more facilities, whereas deprived sections of society engage in illegal and unsocial activities in an economically unbalanced society.
Economic Inequality
Economic inequality is the unequal distribution of income and wealth between different groups in society. It is a concern in almost all countries around the world. Economic inequality can be measured in several ways, but the most common is to compare the incomes of the richest and poorest people in a society. For example, the Gini coefficient is a measure of income inequality that ranges from 0 to 1, with 0 representing perfect equality and 1 representing perfect inequality. In the United States, the Gini coefficient is currently around 0.4, which means that there is a significant amount of income inequality in the country.
Table of Content
- What is Economic Inequality?
- Causes of Economic Inequality
- Economic Inequality Examples
- Economic Inequality in India
- Factors of Economic Inequality
- Impacts of Economic Inequality
- Means to Address Inequality
- Challenges in Reducing Inequality
- Government Initiatives to Face Challenges
- Important Data on Economic Inequality
- Way Forward
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