Income Inequality Hypothesis Definition

But such comparisons are misleading.

Income inequality hypothesis definition. The less equal the distribution the higher income inequality is. This article aims to critically assess the income inequality hypothesis by comparing several analytical strategies namely ols regression multilevel regression fixed effects models and fixed effects models using pseudo panel data. Income inequality is how unevenly income is distributed throughout a population. Differences in national income equality around the world as measured by the national gini coefficient as of 2018.

The hypothesis draws on several interrelated fields of study including. It has been an integral element of the social determinants of health literature. Such overlap continues to obscure our understanding of the relationship between income income inequality and health. The gini coefficient is a number between 0 and 100 where 0 corresponds with perfect equality where everyone has the same income and 100 corresponds with absolute inequality where one person has all the income and everyone else has zero income.

The income inequality hypothesis is seemingly supported by country or state level comparisons between patterns of income inequality and health. The income inequality hypothesis asserts that an individual s health is influenced not only by their own level of income but by the level of inequality in the area in which they live. The income inequality hypothesis states that income inequality has a negative effect on individual s health partially because it reduces social trust. The united states currently holds 41 6 percent of the world s personal wealth making it the richest nation in the world but has a gini coefficient 42 that is the worst of any oecd.

For example tests of the income inequality hypothesis at the aggregate level may be empirically consistent with tests of the absolute poverty or relative income hypotheses at the individual level. Today despite renewed public interest for the increasing income inequality trend in our societies and the collective view. Income inequality in economics significant disparity in the distribution of income between individuals groups populations social classes or countries income inequality is a major dimension of social stratification and social class it affects and is affected by many other forms of inequality such as inequalities of wealth political power and social status.