Income Inequality - Historic View



Income Inequality - Historicand Present View

Introduction

Economic inequality is related to the idea of equal opportunity and equal results. Both in terms utilitarian and ethical - moral , there is controversy over whether the existence of economic inequality is a positive or negative phenomenon. Income inequality has existed in a wide range of societies and historical periods. Its nature, causes and significance are open to debate. The structure or the economic system of a country (eg, capitalism or socialism ), ongoing or past wars and differences in the abilities of individuals to create wealth are involved in the creation of economic inequality. There are several economic indicators to measure income inequality, but often uses the Gini coefficient , but also used the Atkinson index , Theil index , Hoover index , comparison interquintil or variance logarithmic.

Historic Perspective

The issue of income distribution, according to Ricardo is central to political economy. It is even more important than the question of the Causes of the Wealth of Nations, Smith delivered, and is one of the points of disagreement between Ricardo and other great classical economists, Thomas Robert Malthus. In a letter to him, his close friend, Ricardo wrote:

"In your opinion, political economy is the study of the nature and causes of the wealth, and I think that it should rather be called a study of the laws on which the product of labour is divided between the classes involved in its creation”.

The main source of this inequality lie in labour income and a possible explanation would be Educational differences observed between the members of the workforce. An analysis by age group to conclude that income differentials are smaller among younger than among older ones, which could be attributed to minor differences educational ences observed among the first. The evidence presented in this study also suggests that between 1990 and 1994 there was, at least among those born after 1947, a trend towards greater equalization of income. This tendency is cushioned in part by increases in the premium to education in this period, those who were responsible for those born Prior to 1947 increased the income inequality. The study also illustrates the impact on the distribution of household income is unequal participation of women in the labor force and unemployment among young people. Continue raising educational levels of the population and the quality of education actors that are below the levels of many developing countries oped and Southeast Asia, appear to be targets that will result on a more equal income distribution.

Adam Smith

Perfect Natural Order below and societies, individuals and the state are imperfect. Consider the market not as a human construction but nearing the natural order tends to perfection and the state is imperfect. Each time the state intervenes in the market operate freely to shop every time the natural order. The market does NOT state things such as freedom and social justice. Smith social justice is a good distribution of income. The top right is the freedom and those ...