Inequality as a Major Issue in Economics

Running head: Inequality as a Major Issue
Inequality as a Major Issue
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Inequality as a Major Issue1
Executive Summary
The following paper is based on inequalities in organisations and countries, which is affecting
the growth of the world and raising poverty. The paper initially provides various causes of
inequality. Under this section, it includes inequalities in organisation and countries. After
that, the paper includes a recommendation on the various problems of inequality. The study
carefully structures the entire paper to include relevant as well as available information to
support the findings.

Inequality as a Major Issue2
Table of Contents
Introduction................................................................................................................................3
Various causes of Income Inequality.........................................................................................3
Companies accused of Income Inequality..............................................................................4
Countries suffering from Unequal Wages..............................................................................5
Recommendations to reduce Income Inequality........................................................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................7
Appendix....................................................................................................................................9

Inequality as a Major Issue3
Introduction
Several economies and corporations consist of income inequalities in different forms.
Both the advanced as well as the emerging economies, are heavily affected by the presence of
a large and widening gap between wages. This increase in income inequality is enlarging the
distance between the wealth of the rich and the poor. This negative factor and large
differences in income distribution are affecting the growth of economies. This factor is one of
the crucial reason behind the stagnated growth of a developing economy. Moreover, the
large-scale poverty in the advanced economies is an outcome of the unequal income
distribution. Economies with differences in income between individuals have higher rates of
criminal activities, health problems, political instabilities, increased malnutrition and greater
rates of illiteracy. Apart from economies, there are income inequalities within a corporation
as well. The larger corporations tend to differ between wages in terms of degrees, gender and
in certain cases relations. Therefore, there is a greater number of problems or negative effects
derived from income inequality. As a result, the following study tries to highlight the major
causes of inequality in income. In addition to this, the study includes the unequal distribution
of wages in companies and countries. Lastly, the study provides a plausible recommendation
to reduce income inequality to foster economic and business development.
Various causes of Income Inequality
Income differences are made not by nations but mainly by corporations. There can be
different types of reasons behind employers providing different sets of wages to their
employees. These ranges from the level of education and high skills to gender
discriminations. In this modern era, technology is one of the most important factors for
globally competitive companies. As a result, companies hire workers with high analytical
skills and knowledge to prosper in business. Developing or emerging economies have greater
illiteracy rates. In addition to this, the skills infused within the educated workers are low. This
results in offering lower wages to such employees (Alvarez, 2015). Thus, a greater supply of
relatively low-skilled labour exists in a free-market economy. The demand for high-skilled
labour and supply of irrelevant employees causes excess supply situation in the labour
market. Hence, this reduces the wage rate of the market and makes the situation worse-off.
This leads to the formation of inequality in income distribution.
Apart from the education and skills of workers, an increase in technological
innovation is affecting the demand for labour. For workers with lower skills and education