Who has income inequality affected the most?


Income inequality has affected children the most. As child poverty was decresing, income inequality was increasing. High inequality rates are likely to continue in the next generation. Children with disabilities, poor children, and children living in rural areas, especially in the former homelands. Studies show that only a third of children were living with both of their parents. With income inequality in the U.S. being as high as it is, its hard for parents without jobs to provide for their children things that they really need to survive.

How does the income gap affect states?


As you can see above, Idaho is lagging behind the national average in concerns to the income gap. Unlike the nation, Idaho has still not recovered from the recession. There has not been a specific cause found as to why Idaho has not recovered. I think if Idaho were to produce a few more jobs they may step onto a brighter path to overcoming their debt.

Other than Idaho, Illinois also has a growing income gap. Illinois is ranked ninth greatest income inequality. In other words, Illinois is ranked 12th out of the fifty states. This had mainly been caused by the shutting down of factories and industries leading to massive job cuts. Journalists suggest the income gap is widening fast in Illinois.

How does the income gap affect the economy?

The income gap actually affects the economy negatively. It causes less stable economic expansions and sluggish growth. Mr. Ostry and Andrew G. Berg found that in rich countries and poor, inequality strongly correlated with shorter spells of economic expansion and thus less growth over time. I think the income gap in America drastically affects the economy. If we continue with the same income gap that we have today, it will lead to jobs lost and slower job creation. We have a huge income gap and a suffering economy. I'm not saying that the income gap is the sole cause to our economic difficulties, but I certainly believe that it is one of the leading causes.
                             

How does the American income gap affect different generations?

For the elderly, the future does not look very bright. The average American has to work a longer period of time before they can reach their retirement because they simply would not have enough money saved to live off of. This is horrible. The percentage of people who have worked hard their entire lives in this country will never get a break.

For the middle aged/young adults, there does not seem to be a bright path in the future. There are many rumors that Social Security will run out soon. Besides not being able to look forward to a comfortable retirement, the middle aged adults today can barely find decent jobs.

What about the children? The youth of today could very well be the ones who are affected the most by our crumbling economy. Why, you might ask. Well because the youth of today will most likely NOT have social security at all, will most likely NOT be able to land a solid career in the future economy, and more teens and children will be more likely to live in poverty. Why does our future look so dreary? Who knows. The choices parents make will affect the younger generations as long as time goes on. At this rate, the future does not look very bright at all.
                                

What is the status of income inequality around the world compared to the United States?

According to The Atlantic, income inequality is worse today than it was in 1774.  The rankings of inequality haven't changed much over two decades, but inequality is rising in most developed countries. No one knows absolutely why. The increase in income inequality has been greater in Canada than in the U.S. since the mid-1990s. I think income inequality has a bigger affect on the U.S. than it does in any other countries because our gap is greater than most others and the bigger the gap the larger the affect is.



Below are two different charts that illustrate the U.S. income distribution.

What are the social effects of income inequality?

A current study being conducted by Ioana Pop is trying to connect income inequality to work performances in society. So far, they have found correlation between work performance and social problems such as physical and mental health, violence, and educational performance. The wider the income gap the more each of these social problems are affected negatively.

Can income inequality affect your health?
The answer is yes! The pressure and stress for lower income families can be caused by having to find ways to get the bills paid. Plus, who knew that financial stress could lead to an earlier death? Besides health related issues, income inequality has also been matched to crime rates, high school drop-out rates, and teen pregnancy.    

I'm beginning to believe that the social effects of income inequality are endless! After dissecting different research, I've found that income inequality can be linked to many illnesses and disorders in many ways.

Below are some charts showing the correlation of different lengths of income inequality

                                               
                                               
                                               
                                                
Essentially what these graphs show is that when the income inequality is lower in certain states and countries around the world, people are better off: homicide rates are lower, there are less drop outs, life expectancies are higher. Even if the states or countries aren't as rich, the fact that the income inequality is lower greatly contributes to the well being of the people in that area.

Is income inequality preventable? Should we prevent it? How? Why or why not?

Income inequality is not necessarily preventable, although some will try to. According to St. Louis Fed, "income inequality will still exist even if the income inequality statistics are adjusted to account for the aforementioned factors" such as household size, tranfers recieved and taxes paid. Income inequality is really just the effect of a well-fuctioning capatlist economy. The income a person makes is related to not only their education, but their productivity. People are not more wealthy because they have more money, but because they are more productive. So to prevent the income inequality you would have to prevent a person's inequality. We shouldn't prevent it, though, because if we do we lose all the benefits that come along with our well-functioning economy. Economic research has documented a positive correlation between entrepreneurship and the overall economic growth of a country. We should not be in favor of policies that aim to shrink the income distribution by redistributing income from the more productive to the less productive simply for the sake of being fair. Redistribution of wealth increases the costs of entrepreneurship and innovation, that results in having lower overall economic growth for everyone.