The Education and Income Inequality

Education and Income Inequality
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EDUCATION AND INCOME INEQUALITY
Over the past few years, there have been high and rising levels of income inequality in America. Additionally, the rates of unemployment and attainment of education are related to each other. These factors can be related to income inequality. When a country is educated, there are low levels of unemployment rates. Sometimes those individuals who have low educational attainment drift between recession and depression while those that have high educational attainment experience increased wealth, little recessions and depressions. The purpose of this assignment is to establish a connection between income inequality, education, and unemployment. The paper will also discuss how income inequality can be measured and the effects of income inequality on the economy of the United States.
Methods of measuring income inequality
In the United States, income inequality has been received as a very significant problem over the past few years (Stelzner, 2015). According to the Census Bureau, income inequality had reached its highest level in 2019 (Rothwell, 2019). Additionally, how income inequality is understood by people has an impact on the amount of income inequality a nation is likely to experience. Income inequality might seem to be a simple term but it means a lot of things depending on the point of view (Cowell, 2011). According to Piketty & Goldhammer (2017), today wealth is more unequally distributed than income. The following are some of the methods that can be used to measure income inequality.
1. Use of Quintiles to measure Income inequality
This is one of the common ways of measuring income inequality. This method positions the household by income that is from the lowest to the highest (Rothwell, 2019). After ranking, the next step is allocating all the households into groups of five with an equal number of individuals (quintiles) (Perez-Arce, Amaral, Huang & Price, 2016). This computation enables economists to ration income distribution among the groups and equate it to the total income (Rothwell, 2019). The first quintile is normally the lowest fifth while the second quintile is the next lowest (Odusola, Cornia, Bhorat, Conceição & United Nations Development Programme, 2017).
2. Use of Lorenz Curve
When measuring income inequality, data that is obtained can be manipulated in different ways. When using the Lorenz curve to ration income inequality, the percentiles of the population are plotted on the horizontal axis according to income (Odusola, Cornia, Bhorat, Conceição & United Nations Development Programme, 2017). The curve also shows the aggregate population on the horizontal axis and the aggregate proportion of the income that is received in the vertical axis (Piketty & Goldhammer, 2017). Each illustration of the Lorenz curve starts with a line that is sloping up to a 45-degree angle. A dashed-line is used in the curve. The Lorenz curve is commonly used to indicate income inequality because it can determine inequality in all systems (Cowell. 2011). In a Lorenz curve, more income inequality shifts away from the 45-degree line while the equal distribution of income moves closer to the 45-degree line (Stelzner, 2015).
For example, the graph below illustrates the income inequality of the United States between 1980 and 2016. In the graph, it can be interpreted that there was greater income inequality in America between 1980 and 2016 because the Lorenz curve for 2018 is beyond the degree line than for 1980 (Stelzner, 2015).
3. Use of the Gini Index
The Gini coefficient is a statistical measure of distribution that was introduced by Corrado Gini (Rothwell, 2019). The coefficients are used to measure the distribution of income of a given population (Cowell, 2011). Its coefficients range from 0 to 1 whereby 0 denotes equality while 1 denotes perfect inequality. A high Gini index indicates that there is high-income inequality with some individuals receiving much higher income than others (Piketty & Goldhammer, 2017). However, this tool should not be mistaken for the complete measurement of income. Additionally, a low-income nation and a high-income nation can have the same Gini coefficients as long as the incomes are distributed correspondingly (Yitzhaki & Schechtman, 2013). This can be elaborated with the case of the United States and Turkey in 2016 whereby both countries had 0.39 -0.40 Gini coefficient (Stelzner, 2015). 
Effects of Income Inequality in the United States
The United States of America has the highest levels of income inequality compared to other nations (Cowell, 2011). The economic and political effects of income inequality include high levels of poverty, slow economic growth of a country, decreased income mobility, political polarization, and increased levels of household debts (Cappellari, Polachek, Tatsiramos & Forschungsinstitut Zur Zukunft der Arbeit 2016). Alternatively, income inequality can be a result of technological changes, low tax rates on high incomes, high levels of unemployment among others.
Income inequality undermines economic growth by limiting education opportunities to children who come from poor backgrounds. This reduces social mobility and also undermines the development of important skills among these children. Approximately 40 children who come from poor backgrounds miss various educational opportunities (Piketty & Goldhammer, 2017). As a result, the economy produces less productive employees. Such employees are paid low wages and this limits their participation in economic development. Nonetheless, Cowell (2011) asserts in countries where there is income inequality, these levels of inequality can boost the GDP of the developing economies because wealthy people can invest more in businesses. However, this hurts developed economies because of unfavorable effects on the attainment of education.
Income inequality is the main cause of poverty in the United States. This is because when income is distributed unevenly in the economy, some families receive low wages while others are paid highly (Cowell, 2011). This makes it hard for these families to acquire basic needs or participate in the development of the economy. Inequality reduces the capacity of the economy to grow. The poor are not provided with adequate income to improve their standards of living. Persistent poverty in the United States can only be reduced by raising the income levels (Piketty & Goldhammer, 2017). Lastly, income inequality results in high levels of unemployment. This is because the rich will end up investing massively in the economy. In some cases, some companies will require educated and qualified employees. Since there are high levels of poverty in the economy, poor people cannot attain education. This means that these individuals might not secure jobs. This results in increased levels of unemployment.
Estimation
In the United States of America, Americans who have a high school diploma are very few compared to college graduates. The earning gap between college graduates and high school graduates is large (Cowell, 2011). This inequality has become a major source of obstruction in the United States. In America, university graduates earn 56% more than high school graduates. The rates have continued to increase because, in 1999, the rates were 51% (Stelzner, 2015). This indicates that these rates have continued to increase. Additionally, after the great recession of the United States, college graduates gave continued to get new jobs and higher pays. Non-college graduates in the United States have limited job opportunities. College graduates have also continued to enjoy a lot of benefits over other Americans who are not educated. Education has become a dividing factor between Americans in the employment sector.
This gap has continued to increase because, in 2019, college graduates had dominated the economy (Rothwell, 2019). A large proportion of the workers are college graduates compared to high school graduates. The reason behind this trend is that there is a high demand for employees and the retirement of old employees who are likely to be high school graduates. The higher the educational attainment the higher the weekly earnings in the United States. Additionally, the educational threshold results in high average salaries. People who hold a bachelor's degree have higher earnings. Those people have a master's degree are paid higher wages compared to other employees. Both college and master's degree employees belong to labor unions. These unions have played a very significant role in determining the pay of these employees. Moreover, high school workers do not own any assets like homes.
The widening gap between the educated and the uneducated
Income disparity exists in a society or a nation where there are differences in regions, races, gender, and education among others. The flaring gap between the educated and the uneducated has affected the education sector negatively....