Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 18: Problem 4

Describe the main factors economists believe cause inequality of income.

Short Answer

Expert verified
The main factors economists believe cause income inequality are differences in education and skills, discrimination, and the distribution of wealth.

Step by step solution

01

Factor 1: Differences in Education and Skills

A primary factor that contributes to income inequality is the difference in education and skills among individuals. Those with higher levels of education typically have access to higher-paying jobs, resulting in a larger income. Additionally, specific skills, particularly in high-demand areas such as technology, can greatly increase an individual's income potential.
02

Factor 2: Discrimination

Discrimination, whether based on race, gender, sexual orientation, or other factors, can also lead to income inequality. If certain groups are systematically paid less for their work or have fewer opportunities for career advancement, this can result in a significant income gap.
03

Factor 3: Distribution of wealth

An unequal distribution of wealth can exacerbate income inequality. For example, if the majority of a country's wealth is held by a small percentage of the population, this can lead to significant income disparities. Further, inherited wealth can perpetuate income disparities across generations.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

In Chapter 4, Section 4.3, we discussed the federal government's agricultural program, which is often called the "farm bill." Because the U.S. Department of Agriculture administers the Supplemental Nutrition Assistance Program (SNAP), more generally known as the food stamp program, its funding is included in the farm bill. Some members of Congress believe that spending on SNAP should be reduced. In an article in the Washington Post, Marion Nestle of New York University was quoted as arguing: "[The program is] at great risk, and what has saved it from being chopped up into little pieces is that it's in the Farm Bill and therefore logrolled with agricultural supports." Briefly explain what Nestle means by "logrolling" and evaluate her argument.

The federal government imposes a tax on sales of cigarettes. The federal Centers for Disease Control and Prevention compiled the data shown in the following table. \begin{tabular}{l|l} \multicolumn{2}{c} { Percentage of Adults Who Are Current Cigarette Smokers, 2015 } \\ \hline At or above the poverty level & \(15.5 \%\) \\ \hline Below the poverty level & \(29.5 \%\) \\ \hline \end{tabular} Based on these data, is the federal cigarette tax progressive or regressive? Be sure to define progressive tax and regressive tax in your answer.

(Related to Solved Problem 18.3 on page 616 ) Explain whether you agree with the following statement: "For a given demand curve, the excess burden of a tax will be greater when supply is less price elastic than when it is more price elastic." Illustrate your answer with a demand and supply graph.

What is a Lorenz curve? What is a Gini coefficient? If a country had a Gini coefficient of 0.48 in 1960 and 0.44 in 2018 , would income inequality in the country have increased or decreased?

(Related to the Chapter Opener on page 600 ) In 2017 , the Trump administration proposed changes to the federal tax code, including reducing the top corporate income tax rate from 35 percent to 15 percent. An article in the Wall Street Journal noted, "A tax overhaul could give companies more incentive to invest." a. What type of investments is the article referring to? Why would cutting the corporate income tax rate lead companies to engage in more investment? b. Some policymakers and economists are critical of cuts in the corporate income tax rate because they argue that such cuts increase income inequality. Does the incidence of the corporate income tax matter in evaluating this argument? Briefly explain.
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free