Question

In: Economics

Briefly list 5 reasons income inequality has over the 35 years.

Briefly list 5 reasons income inequality has over the 35 years.

Solutions

Expert Solution

Income inequality has grown notably in United states after 1970's and gradually increase over the period of time and the main 5 reasons for it is are as follows

1)Globalization -cheap labors are available in Asian countries like India and China so the labors who are low skilled faced tough competition from cheap skilled labor of Asian countries .

2)technology change - Due to technology change demand for high skilled labor increased who can work on machines and computers than manual labor so the many people lost their job and unemployment increased

3)Immigration-after 1965 the immigration of low skilled increased relatively due to which the wages of American born high school dropout decreases and it increased income inequality .

4)decrease in influence of unions -unions insured that shareholders and top management were not unduly rewarded and low level labors are not exploited but gradually influence of union decreased and salaries of CEO's increased which created income inequality .

5)political factor -after 1970's there is shift towards rightward in politics due to which comparatively more regressive tax laws were made and anti labor policies are followed which led to increase in income inequality .


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