Economic Inequality And Its Effects On Economic Growth

â€Å"The rich get richer, and the poor get poorer† is an aphorism elicited from the topic of economic inequality. Over the past decades, economic inequality has been rising and at an increasing rate, expanding the gap between the rich and the poor. The direct relationship between inequality and poverty has shown that while inequality increases, so too does poverty. Increased inequality is harmful for economic growth and its effects also bear social implications. Although there are arguments on the consequences of wealth redistribution and its unintended impact on economic growth, wealth should be redistributed to reduce inequality and poverty, sequentially leading to more economic development and a higher standard of living for society. Economic inequality occurs in two forms: income inequality and wealth inequality. There remains a dispute between whether income inequality or wealth inequality should be the focus to reducing economic inequality. Considerable attention has been given to income disparities, however, it is important to realize that simply addressing income inequality will not adequately address the gross disparity between the poor and the ultra rich. For example, Bill Gates is estimated to earn around $7 billion per year (estimates vary wildly depending on how his income is calculated). However, even if this income was taxed at 100%, Gates would still have in excess of $70 billion in accumulated wealth. Gates could continue spending a million dollars per day,Show MoreRelatedThe Effect of Income Inequality on Economic Growth1341 Words   |  5 Pagessomebody wonders why did I choose the subject of inequality the previous lines are exactly the reason. The hypothesis I will try to prove further in my p aper is that the striking gap between rich and poor population in the world cannot lead to economic growth. Furthermore, Human Capital is considered to be the main force that stimulates economic growth. But now that human capital is scarcer that machines, widespread education has become the secret to growth. However, education is hardly accessible toRead More1. Does Gender Equality Contribute to Economic Growth? There is a long established tradition of800 Words   |  4 Pages1. Does Gender Equality Contribute to Economic Growth? There is a long established tradition of estimating growth models within the economics discipline. Early models took labor as a ‘given’ factor of production, exogenously determined by rates of population growth. There was very little coverage for exploring the human, leave alone the gender, dimensions of growth in these models (Walters, 1995). This changed with the rise of endogenous growth theory and the bigger reputation given to the accumulationRead MoreThe Context Of Growing Economic Interdependence1672 Words   |  7 Pageswill endeavour to explore the context of growing economic interdependence (globalisation); inequality is both growing within and between nations. In turn, analysing the following the following statement that â€Å"Inequality can undermine economic, social and perhaps even political stability. It can tear the very fabric that holds society together. We now have firm evidence that a severely skewed income distribution harms the pace and sustainabi lity of growth over the longer term. The growing gap betweenRead MoreBenefits Of Income And Assets Inequality Essay1462 Words   |  6 PagesIntroduction: Income and assets inequality is a significate issue in economy. Throughout human history capital and assets will likely continue to accumulate and become more concentrated, as a result that an greater level of inequality might be witness. Piketty ( 2014 ) found that the rate of GDP growth is lower than return on capital. This Piketty s famous rg inequality shows that assets tend to accumulate faster than the rate of economic growth in capitalist societies which means capital distributionRead MoreInequality Of Economic Growth And Inequality1699 Words   |  7 PagesEconomic growth and inequality has been a long debated topic but is more important in the recent decades as income inequality has dramatically grown within many countries; the implications on these can hinder social and political development. Economic growth and its link to Equality can help create stability for an economy and improve living standards in the long run. 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