Question

How would you define income inequality? How is income inequality measured? What has happened to income inequality in the United States since the end of the Second World War in 1945? What evidence can you provide to support your answer? What are the reasons for the changes in income inequality since 1945.

Answer 1

pase-) Income Inequality is an extreme concentration of wealth one income in the honds of a imals percentage of a population. It has been described as the gap between the richest and the reat. Significant disparity in the distribution of income between indivisuals, groups, populations, social chaves, ore countries. Income Inequality is a mogore dimension of social streatification and social claus. It affects and is affected by many other forems of inequality, such as inequalities of wealth, political power, and social status. Income in a malore determinant of quality of life, affecting in the health and well-being of indivisuale and families, and variel by social factores such an dex, age and race ort ethnicity. It is defined as howe hold did porable income in a parchicufare geare. It conents of earnings, self employment and capital income and public con trean fers, income taxes and social recurcity contributions paid by house hold aree deducted. Economics uue various metures fore mealweing income inequality. Here the most commonly wed paluces the Lorenz curve, the gini coefficient, decile ration, the palma ratio, and the Theil index are discuned in relation to their benefits and limitations. Erually important is the choice of what to measure, gre tax and after tax income consumption, and wealth are weful indicators. and different sources of income duch of wages, capital, gaine, taxes and benefite can be examined.

page-2 Understanding the dimension of economic incauality is a key first step Loward choosing the right Policies to addreu it. 1.0t ........ Perfect equality DonosNorway +86806- US 46448d Breazil ------ 884 esoto Shore of Income o.6. 0o-occorso o. lt 2000-000000 WODO Dp D#DUDU 0.4 Share 0.6 0.8 population of (Lorenz curves show income inequality is higher in Breazil than the US and Norway ) Income measurement in the calculation of preofit and Lou for an accountant, income is what's left over aftere gub & treaching all of an oreganization's expenses. This can get a little complicated, especially when dealing with the time value of money ore depreciation.

page- The income inequality in United states since the end of 1945, united statul vling individual tax reetwen data. Top income and wages shares display a e-shaped patteren over the centurey o ure series euggest that the large shocks that capital owners experienced during the great depression, and world ware ll have had a permanent effect on top capital incomes. We argue that steep - progrewire income and estate taxation may have preevented large fore tunes from fully recovering from there shocks. Top wage shages were flat before woreld ware ll, dropped precipitaully during the ware and did not start to recovere beforce the late 1960s but are now higher than before world ware ll. As a result, the working reich have replaced the rentiere at the top of the income distribution.