Question

• Is inequality necessary? Is it good?
  • Describe economic inequality in America.
    • Compared with other countries or with the United States in the past, how unequal is the distribution of income?
    • Who is rich and who is poor ? Are there demographic differences between rich and poor Americans?
  • Should we equalize income for all Americans? Explain the utilitarian and Rawlsian arguments for egalitarian social policies.
  • Should we equalize income for all Americans? Explain alternative arguments against egalitarian policies, such as natural rights arguments (John Locke and Robert Nozick) and utilitarian arguments (Arthur Okun).
  • Are egalitarian policies gendered? Do women benefit more from egalitarian policies that reduce disparities in income? Why?

Answer 1

Inequality is necessary to encourage entrepreneurs to take risks and set up a new business. Without the prospect of substantial rewards, there would be little incentive to take risks and invest in new business opportunities. Fairness. It can be argued that people deserve to keep higher incomes if their skills merit it. Inequality means there is a gap between the highest income earners and the lowest income earners. (inequality can also relate to wealth). On the one hand, you can argue inequality is necessary for providing incentives in a free market economy; without a degree of inequality, there would be economic stagnation and lack of enterprise. On the other hand, you could argue that inequality has many disadvantages and is evidence of fundamental problems in society.

Rising economic inequality in the United States has become a central issue in the race for the Democratic presidential nomination, and discussions about policy interventions that might help address it are likely to remain at the forefront in the 2020 general election.

As these debates continue, here are some basic facts about how economic inequality has changed over time and how the U.S. compares globally.

For this analysis, we gathered data from the U.S. Census Bureau, Organization for Economic Cooperation and Development and the World Bank. We also used previously published data points from Pew Research Center surveys and analyses of outside data. First, gender wage gaps directly contribute to income inequality, and higher gaps in labor force participation rates between men and women result in inequality of earnings between sexes, thus creating and exacerbating income inequality. Despite progress, wide gaps between women and men’s economic empowerment and opportunity remain, which policymakers need to tackle urgently. In most countries, more men than women work, and they get paid more for similar work. Also, there are considerable gender gaps in access to education, health and finance in a number of countries. There is mounting evidence that the lack of gender equity imposes large economic costs as it hampers productivity and weighs on growth.

Our new study analyzes the links between these two phenomena—inequality of income and that of gender. We find that gender inequality is strongly associated with income inequality across time and countries of all income groups.