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Drivers of inequality (Childhood (Primary and Secondary
Level Education…
Drivers of inequality
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Technology
Increase in technology decreases the demand for low skilled workers and increases the demand for educated workers who work in technology based jobs.
Technology allows people to create businesses with relatively few employees that can generate very high levels of income.
Criticisms and issues
Some research suggests that rather than being the result of a market reacting to technology increases in high pay come as a result of rent seeking behaviours by corporate executives and financial professionals. Rather than those at the top generating higher productivity they instead use artificial methods to boost their income at a far greater rate than any increase in value of their companies
Labour market developments and changes in employment structure don't neatly the map against increasing wage inequality with occupational employment changes and wage gaps between the middle and bottom have not changed as would be predicted by technology focused theories.
Globalisation
Trade Liberalisation
Liberalisation of export rules may increase pay inequality between people working in the same industry. Research suggests that this may be because increased trade with developing nations has improved average living standards but decreased wages of low skilled workers due to foreign competition, thereby increasing the gap between the middle and the bottom.
Criticism and Issues
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Some research suggests tariff reduction may be associated with a decrease in inequality in developed countries due to productivity gains.
Other research suggests trade liberalisation has less of an affect on inequality than that because by technology. Countries spending more on technology see higher inequality than those that have the most immigration and trade
Tax Avoidance
Globalisation increases the scope for tax avoidance which can increase financial fragility and inequality.
Immigration
Immigration increases the incomes at the very top but decreases incomes for those in the bottom 20% of the income spectrum.
Childhood
One of the strongest predictors of latest success is the general knowledge and vocabulary of a child before the age of six.
A Childs development score at 22 months can serve as an accurate predictor of education outcomes at 26 years.
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Higher Education
People who hold academic qualifications receive much higher returns in later income from work then those who pursue vocational qualifications.
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Highlevels of public funding for higher education do less to increase enrolment in higher education than higher funding for primary and secondary education, which has a large effect on enrolement in higher education
Family
Parental Income
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Family income was a better predictor of income for those born in 1970 and those born in 1958 demonstrating a decline in social mobility.
A lack of parental income causes a child to have lower cognitive development and poorer school achievement.
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Family Wealth
Family wealth can have an affect on later income. One major factor in people being able to start up a business is whether or not they have access to family assets.
The main form that wealth comes in is housing and land. In the UK, this inequality of wealth is being bolstered by increases in house prices. As house prices increase those who already own housing become wealthier and those who do not become less likely to be able to buy a property.