Abstract
The last two decades has been characterized with increased inequality in the incomes. The gap between the rich and the poor continues to increase with each passing day. Economic and non economic conditions affect this distribution but despite this various strategies can be put forward to achieve mobility.
Introduction
Inflation is one of the leading economic causes that affect distribution of incomes. Inflation makes essential and basic commodities expensive to purchase hence this mainly affects the low income earners. Inflation reduces disposable incomes of low income earners while individuals with huge incomes being least affected. Unexpected inflation in the economy benefits debtors and negatively affects the creditors. All these affect how in income is generally distributed in the state (Salvatore, 2006).
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"Income Inequality".
Unemployment continues to increase the gap between the rich and the poor. This therefore means that income distribution will be uneven when we have many people who are not employed.
General public expenditure in addition to the government involvement in the economy through its policies to determine interest rates and taxes does have an impact on the distribution of incomes.
Taxes also affect how income is distributed. High taxes reduce disposable incomes, discourage investment and generally increase the cost of living. Income distribution will therefore be unequally distributed when the taxes are raised or when the tax policies are unfavorable in the economy. (Salvatore, 2006).
Education is one of the non economic factors that affect income distribution in the states. Education opens up employment opportunities for a person. Individuals who complete their education up to university level have more chances of earning more incomes than their counterparts who do not complete their education.
Birthright or social economic status also does have an impact on the income distribution. This means that a child born in a rich family is most likely going to end up rich when they are adults. This is because they have the opportunity to go to fancy schools and also have so many resources at their disposal (Hein, 2006).
Income distribution also varies according to geographic regions. Individuals living in the southern states are seen to have low incomes than individuals living in the northern states.
Immigrants who come into the states also affect income distribution. This is because they will settle for a lower pay than the native born individuals. This generally has an effect on the minimum wage offered in the market hence affecting how the income is distributed.
Mobility simply refers to improvement of the economy so as to achieve even distribution of the income (Hein,2006). The government involvement in the economy or laying down of policies that cushion against unexpected inflation can achieve a stable economy hence leading to equal distribution of the economy.
The tax systems can help achieve income mobility. The tax policies can be in such a way that the rich are taxed more while the low income earners are taxed a low percentage. This will enable the low income earners to still remain with a high disposable income therefore improving income distribution across the spectrum.
Government transfer payments also increases disposable incomes of individuals who earn a small wage and reduces some of the incomes of individuals who earn big amounts. This therefore serves to achieve a balance in the incomes hence contributing towards income mobility.
Increase in investment increases employment rates in any state. With more people employed more people will be earning a salary and subsequently achieving economic growth and stability. This has a long term effect on the income distribution as this distribution will stabilize leading to mobility.
Improvement of trade increases money supply in the economy and thus leads to stability and growth in the economy. The income distribution in such an economy is bound to be evenly distribution therefore achieving income mobility.
- Campano, F., & Salvatore, D. (2006). Income distribution. New York: Oxford University Press.
- Hein, E., Heise, A., & Truger, A. (2006). Wages, employment, distribution, and growth. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan.
