Income Inequality Essay. Social Sciences Assignment.

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Income inequality
What are the impacts of income inequality and the position of governments in the affected countries in solving the issue? Although income inequality may seem negative, it also has positive impacts on economic growth. Most economists have missed the argument and research on how inequality yields positivity. Hence, people across the globe concentrate on knowing the adverse effects and how to fight them. This engagement leads to the need for governments to intervene and decrease the levels of inequality. However, the government may or may not be in the position to solve the issue adequately.
Provision of incentives entrepreneurship
Income inequality impacts positive growth through the provision of incentives for entrepreneurship. Innovation is prevalent in developing countries, whereby few of the willing individuals in the population get a chance to accumulate the substantial capital needed to start and run a business successfully. Also, some individuals can gather some resources for acquiring standard education. Although some economists may perceive that the actions could hurt the economy more, it stands in the position of a future investment that could aid in achieving equality. On the other hand, the developed countries with vast numbers of entrepreneurs report increasing income inequality (Halvarsson et al.). Could the two economic aspects have parallel implications for growth? Is income inequality paving the way for entrepreneurship, or is the latter leading to the former? People become creative in the face of income disparity. As most of the wealth continues going to the already wealthy individuals, the people in poverty and the adverse levels have to seek means of survival (Naudé, 1). This gap iterates to the thinking in line with entrepreneurship as a source of income. How do interested individuals get the capital to start their business? The only way is incentives since they cannot afford the required money.
According to Halvarsson et al., entrepreneurship is not a source of income inequality but an optional source in various economies, whether in developing or already developed countries. Most people in the global economy keep on seeking for ways to achieve more. On the other hand, the low income earning individuals are striving to thrive and eradicate the poverty around them (Naudé, 1). Working out these desires yields the opportunity to weigh different options, and entrepreneurship is always in line. Although the different groups of individuals may have varying levels of capability to input in the plan, they all have something to present. Halvarsson et al. argue that studying entrepreneurship in income inequality shows the importance of the aspect in flattening the curve in the disparity since most of the people in the economy can earn something towards supporting substantial living. While some people think that entrepreneurial ventures promote inequality in wealth and the overall income, development economists want to look into the process to prove the involved populations wrong (Naudé,1). Investors go through an intense process to achieve the capacity of becoming entrepreneurs. Also, different ventures are triggered and established under different circumstances. Looking into these factors shows that an investment is just an option for earning and survival and not a loop to the promotion of income inequality.
A threat to long-term social and economic development
On the other hand, income inequality affects economic growth negatively. According to a report by the Organization for Economic Co-operation and Development, reducing income inequality would boost economic growth. The research and analysis conducted by the organization show that the countries decreasing inequality have escalated levels of growth than the nations with ascending levels in inequality. The study by the Organization for Economic Co-operation and Development reveals that all countries can attain enormous economic growth, but they have a constraint (income inequality). Hence, they should analyze and work on the issue by all means to ensure the achievement of economic growth. Although the problem may look insignificant for some countries, its impact on growth occurs in the continued widening of the gap between the low and high-income earners. Should the situation prevail forever? Should the poor continue rotting in poverty while the rich enjoy their wealth? Agreeing and supporting this disparity results to slow economic growth since the former do not contribute anything to the economy. Although the high income earning individuals may remain in their stable levels, their single contribution cannot yield growth since the non-participants have to still benefit from the economy.
Income inequality impacts the GDP per capita of the affected countries negatively. Having the aggregate of the aspect affected shows that the state cannot progress in various developments and investments contributing to economic growth. “For example, at the 25th percentile of initial income, the predicted effect of a one percentage point increase in the Gini coefficient on GDP per capita is 2.3% (with a corresponding standard error of 0.6%); at the 75th percentile of initial income, the effect is -5.3% (the corresponding standard error is 0.8%)”, (Lederman). The error in the outputs detriment economic growth since most of the projected investments fail or operate below average and the anticipated levels. For instance, the Organization for Economic Co-operation and Development research shows that the most significantly affected aspect of economic growth is education for people from relatively low socio-economic backgrounds. The undermining of the chance to offer such populations the opportunity to study results in the continued prevalence of illiteracy in the affected countries. Hence, this issue lowers social mobility by inducing constraints in the development and achievement of skills. Economic growth is not achievable without the required innovations and levels of knowledge in education, and most countries have to suffer the consequences in income inequality and iteration of stagnated growth.
Government intervention towards income inequality in equalizing opportunities
Although capitalism in the past reigned in the underpinning of most prosperous nations, the consequences could not match the intensity of economic inequality. Various countries, including the United States, suffer the consequences of income inequality, and they may neither know the sources nor solutions to the issue (Committee for Economic Development). How then should they escape income inequality? How should the government help the failing community, such as lazy individuals who do not participate in the industrial building? However, looking into the situation reveals that even the hardworking people in the affected countries suffer the repercussions triggered by the disparity (Committee for Economic Development). The engagement of the impact on all citizens yields the need for close and immediate interventions to fight the issue and ensure equality. For instance, knowing that developed countries such as the United States do not have equal chances for opportunities creates the alarm for action. On the other hand, as long as people look out for the government to take action, it may not know what to do to create the chances of success at reach for all citizens despite the differences in their socio-economic levels.
What if the government decided to intervene in equalizing inequality? Would the engagement yield the desired opportunities in the economy? Would all the citizens in co...