Equitable Distribution of Income and Wealth
Equitable distribution of income and
wealth
Distribution of income
Inequalities of wealth and income
Effects
A fair (not necessarily equal) final distribution of personal income, so that all can access basic goods and services
The way that a country’s income is spread among individuals within various socioeconomic groups
Tend to be closely
related to the level of attainment of the other measures of the standard of living
Not all people enjoy the benefits of economic growth
A nation may be economically rich – that is, have high and rising GDP per capita – but it would be difficult to conclude that all of its people enjoy the same high standard of living if there are significant pockets of poverty.
Governments have various policies (taxation, social security and welfare payments) to improve equity, although it is not reasonable or possible to achieve a completely equitable distribution of income and wealth.
The effects of inequality of income can be seen as a benefit to the community in terms of market economics.
The opportunity to achieve greater rewards for developing skills, taking on added responsibility and working longer hours serves as an incentive for workers to achieve their needs and wants through their work.
Entrepeneurs
Higher wages can be an incentive that
will encourage workers to move to new work locations where and when they are needed.
Income inequality can also encourage entrepreneurs to take risks. Removing the incentive of high income for successful decisions will result in fewer entrepreneurs
This can result in more efficient allocation of resources, increased competitiveness and economic growth, so improving the community’s overall standard of living.
The distribution of income is simply a statistical measure of how many people earn or receive various amounts of income. However, people, including many economists, often mistakenly talk as if society is “distributing” income and people are passively receiving it.
When people say things such as “the rich get richer, and the poor get poorer,” they are referring to distribution of income. It describes how all the money (income) earned in a nation is divided among people of various income levels. The most common image used to talk about distribution of income is a pie.
Equitable distribution of income ensures distributing welfare to ensure fairness and allowing members of the economy to have the same opportunity to accumulate wealth. The Government redistributes tax revenue to ensure equitable distribution of wealth.
Equal wealth distribution would refer to wealth being divided equally between states or between individuals but may also be applied to smaller scenarios such as small-scale projects or ownership and control over small-scale income generating activities.
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Income inequality refers to how unevenly income is distributed throughout a population. The less equal the distribution, the greater the income inequality. Income inequality is often accompanied by wealth inequality, which is the uneven distribution of wealth.
Income inequality refers to how unevenly income is distributed throughout a population. The less equal the distribution, the greater the income inequality. Income inequality is often accompanied by wealth inequality, which is the uneven distribution of wealth.
This would result in lower production levels, a loss in the innovation and creation of new products, fewer jobs and a lower rate of economic growth.
Also, higher-income earners tend to save a higher proportion of their wages and salaries. Such savings are an important source of investment in the economy, as they increase the capacity of the economy to produce goods and services
Also, higher-income earners tend to save a higher proportion of their wages and salaries. Such savings are an important source of investment in the economy, as they increase the capacity of the economy to produce goods and services