Income Gap Economic Theory

The inequality most discussed is that in household incomes while economic theory has more to say about earnings.

Income gap economic theory. The middle income trap is an economic development situation in which a country that attains a certain income due to given advantages gets stuck at that level. In a negative income tax system the amount of income below a given threshold is refunded to the taxpayer at a given rate. For example if a threshold was set at 10 000 for an individual with a tax or refund rate of 10 a taxpayer with 11 000 of income would pay 10 in tax. The economic theory of income inequality edited by robert a.

In many countries there is a gender income gap in the labor market 3. First we refer to the relationship between the state of economic development and income inequality. Kuznets curve is the curve that shows the relationship between the stage of economic development and income inequality kuznets 1955 initially income inequality increases at the early stage of economic development while a country is developing and reaches a peak of inequality. The very meaning of economic inequality is fundamental for understanding today s policy debates over issues such as interpreting changes in income inequality over time across countries or between groups within a society as well as determining whether or not society is becoming more polarized with a shrinking middle class.

The world bank defines as the middle income range countries with gross national product per capita that has remained between 1 000 to 12 000 at constant 2011 prices. Becker edward elgar 2013 636 pages 360 00 hardcover the international library of critical writings in economics. With this background keynes a british economist propounded his own theory and in 1936 brought out his famous book general theory of income interest and money which brought about a revolution in economic thought. The rightward shift in the demand for skilled labor creates an increase in the relative wages of the skilled compared to the unskilled workers.

A taxpayer with 9 000 in income would receive a 10 refund. Third standard trade theory predicts that trade openness could reduce the wage gap between skilled and unskilled labor in developing countries by raising the demand for unskilled workers therefore inducing reduction in income inequality stolper and samuelson 1941. Often characterized by the aphorism the rich get richer while the poor get poorer the phrase often refers more specifically to the gap in income or assets between the poorest and richest segments of an individual nation. 12 2 income and earnings one problem touched on in the income distribution literature is simply the very definition of income.

It does appear that the recent changes are mostly in the latter. 279 hb523 this compilation reprints 36 articles originally published in the journal of economic inequality econometrica journal of economic theory mathematical social. Hence the income gap among workers also has widened. Iv gender does matter.