Income Inequality and Poverty.docx - Running head INCOME INEQUALITY AND POVERTY Income Inequality and Poverty Name Institution Affiliate Course Date 1

Income Inequality and Poverty.docx - Running head INCOME...

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Running head: INCOME INEQUALITY AND POVERTY 1 Income Inequality and Poverty Name Institution Affiliate Course Date
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INCOME INEQUALITY AND POVERTY 2 Introduction The United States is considered the largest economy in the world; however, according to (Yglesias 2010, pg.3), about 10% of people in the United States own 75% of the country's wealth while the rest is owned by 90% of the citizens. A report by the World Bank and International Monetary Fund in 2017 indicated that quarter of Americans workers make less than $10 per hour. The income is below the federal poverty level that stands at $63,179 per household in 2018. The considerable gap between the wealthy and poor can be described as income inequality. Income inequality can be defined as the extent of the economic difference between the rich and poor. The income inequality is closely related to poverty, which is defined as a condition of lacking the adequate amount of resources or financial means to cater to the basic needs. For the last three decades; United States and other developed economies have experienced an increase in the inequality of income. Globalization has enabled the company to import labor from different countries and therefore reducing opportunity for United States citizens increasing the level of poverty and economic inequality (Yglesias 2010, pg 13). In this paper we are going to discuss income inequality and poverty and how they can be measured and solved. Poverty can be defined as the lack of resources to cater for the basic needs, on the other hand, Income inequality can be defined as the difference between the resources held by the rich compared to the resources held by the poor. Research by ( Gasparini & Lustig, 2011 pg. 12) indicated that income inequality and poverty are two different concepts with no apparent or direct relationship between them. The change in income inequality does not affect the change in poverty level in the economy. Small changes in income inequality can have a considerable effect on the poverty level. According to (Ravallion, 2017 pg, 19), the degree of inequality in a country significantly affects the impact of growth on poverty.
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INCOME INEQUALITY AND POVERTY 3 Many methods can be used to measure income inequality and poverty. In this paper we are going to look at two methods that are used to measure income inequality they include; the income category and quintiles. Moreover, the result of the inequality can be represented in ways; Lorenz curve and Gini Coefficient.
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  • Spring '17
  • HERICK ONDIGO

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