Comprehensive Analysis of Income Inequality in the US Economy

This report provides a comprehensive analysis of income inequality, particularly focusing on the United States. It explores the causes of income disparities, including wage structures, education levels, and gender discrimination. The report details the consequences of inequality, such as stifled economic growth and increased crime rates, and examines the government's role in addressing these issues through monetary and fiscal policies. It covers different measurement tools like the Gini coefficient and 20:20 ratio. The report also discusses various policy options, including progressive taxation, investment in education, and social security programs. It concludes by examining the trade-offs between economic growth and equitable distribution, and highlights the role of low-paying service sector jobs and technological advancements. The report also explores economic and social policies aimed at reducing income and wealth inequalities in the US.

Comparative analysis of
income inequality
Analysis of different views

Income inequality
What is it?
• Disproportionate
distribution of
income.
• Creates
difference among
wealth of
different
segment of
population.
What is the cause?
• Different wage
structure.
• Level of
education.
• Gender
discrimination.

Income inequality
Consequences of
income inequality
• Stifles growth rate of
the economy.
• Increases the crime
rate.
• Deteriorate the
health standard.

Changes in income inequality overtime
in the US.
• Top segment of
the population
got impressive
growth in
income.
• Corresponding
figure for the
bottom segment
of population is
disappointing.

Debates over the size of income
inequality in the US
• According to few
economists, the size
of the inequality is
alarming.
• Others points out
that wrong
representation
mislead the
government
regarding the
income inequality.

Political differences pertaining to
income inequality
What creates the
difference?
• Difference in
opinion regarding
the impacts of
minimum wage.
What are the
differences?
• Differences in terms
of government
policy.
• Differences in terms
of data implication.

Ways to reduce the income inequality
in the US.
Differe
nt ways
Increase
minimum
wage.
Progressiv
e taxation.
Investmen
t In
education.
Asset
maximizin
g policies

How the government intervenes in
case of crisis
Government’s
action
Expansionary
monetary
policy
(Monetary)
Reduction in
the interest
rates
(Fiscal)

How the government intervenes in
case of crisis
•Rightward shift in the
aggregate demand curve.
•Increase in the level of price
and the overall output level in
the economy.

Main goal of an economy
• Focus on low income
inequality.
• Adequate
distribution of
wealth within the
economy.
• Low differences and
hence low crime
rate.
• Better stability in

Societal balance
How can the
government
maintain low
inequality?
• Redistribution
policy must be
adequate.
• Government needs
to spend on
infrastructure
Real cost of low
income inequality?
• Reduced rate of
economic growth.
• Low purchasing
power compared
to other
economies.

Critical Thinking
and reflection