Inequality and Economic Growth

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This essay examines the relationship between inequality and economic growth and whether they are compatible or not. First, definitions of economic inequality and how it is measured will be presented, then the US’ examples will be taking into consideration when it eventually will be discussed how to boost economic growth and minimizing inequality at the same time There are many different views on inequality and how serious it should be taken. Inequality has been on the agenda of societal debates for years, but in terms of frequency of questions to this topic, inequality must be looked upon as a ship to be embarked and have an opinion on. There are many different ways in which inequality can be measured, why the perception of the word has developed through time and can be racially attached but also sexism, homosexual rights, and even happiness define some of the things we can associate with inequality. There are different ways to measure inequality but the perhaps best known method is the Gini-coefficient – a tool to measure economic inequality, that is. The Gini-coefficient goes from 0 to 1, and the Gini-coefficient being 0 would mean that everyone in a group has the same income, whereas the coefficient being 1 would mean that all the income within a group goes to one single person. It aggregates the gap in income between people in a group and it is often used to compare countries’ levels of inequality. By taking a closer look at some of the statistics, we can see that the emerging economies, such as Brazil, Russia, and China, are more unequal than the developed economies – being the Scandinavian countries, Japan, and other OECD countries. Scandinavian countries have the smallest economic inequality with a Gini-coefficient of around 0.25, whereas the United States is up by almost 30 % since 1980 and is now at 0.39. China, as perhaps the biggest of the emerging economies, has risen by around 50 % to 0.42. By taking these random checks, one would think that the...
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