income distribution

income tax

expansionary fiscal policy (transfer payments: social and unemployment benefits)

Benefits:

Result: if an income tax system is progressive, the after-tax distribution of income is more equal

Limitations: a progressive tax system may be a disincentive to work

Result: transferring income from those who work and pay taxes towards those who need assistance

Limitations: burden on the government budget and sacrificedalternative government spending, potential incentive not to work

Benefits: in developed countries transfer payments are the main contributor of improved income distribution,

policies to reduce discrimination

Result: increased awareness about the problem of inequality, better education in this area

Limitations: Employers may not comply with the policies, they may not be sufficiently concerned about discrimination

Benefits: better morale in a workplace, potential change in the way of thinking about discrimination which may in the long-run lead to reducing this problem

minimum wage legislation

universal basic income

Result: reduced income inequality and poverty

Limitations: too expensive to carry out, potential reduction in other social services e.g. transfer payments, potential incentive not to work

Benefits: administratively simple to carry out, support of diverse groups, more freedom for workers to leave jobs they are unhappy with, stabilising economy during a recession by providing income to the unemployed

Result: decreased income inequality (the lowest-paid workers are better off, and the richest doesn't earn more)

Limitations: higher wages once introduced are almost impossible to reverse (sticky downwards), higher costs of production, producers are reluctant to hire more workers, it is more difficult to find a job, more people working not registered

Benefits: financial stability of the lowest-paid, protection of economic well-being of workers