Income Gap And Income Inequality

The Ways to Battle Income Gap and Lift Poverty

Income inequality in America has been growing remarkably for decades since the gilded age. The phenomenon is depressingly pervasive among working classes, women and minorities. Income inequality creates caste classes and poverty, from colonial period to industrial revolution in 19th century, and to globalized economy of 21st century, and the process of widening income gap has nevertheless become ubiquitous. What is an effective tool to combat the out-of-control spiral of such gap is a usual controversial issue and had been debated endlessly. Some critics believe the government should be taking control on tax policy to effectuate the redistribution of income, while others believe a comprehensive political reform to revolutionize the nation’s fundamental social system is the only solution. Nevertheless, a combination of governmental and social policies, with the collaboration of private sectors, is an effective instrument contributing to the goal of alleviating income inequality and lift people out of poverty.

Urbanization led to dramatic changes in American society during the period of industrial revolution at the beginning of the nineteenth centuries. It caused migration from countryside to inner city for family to earn inequitable wages for a relatively decent life. Meanwhile, increasing immigrants from European countries created greater competition for jobs and downward pressure on wages. The Great Depression of 1930s further caused unemployment rate to rise in American cities and to peak at about 25 percent in 1932. The number of poor increased dramatically, and the numerous citizens became homeless and starved. Subsequent to this miserable period, the promise of New Deal by Fran...

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...ollar per day by over 13 percent in 2015. (World Bank, 2002). In fact, growing globalization is giving rise to increase integration between trade and finance, which become ever more closely interrelated. Most of the developing countries’ financial systems are immature and not comprehensive. Greater financial openness and greater support from government mean additional availability of financial assets used for direct investment. It smooths out productivity shocks and mitigates output volatility, which enable greater stability in supple chain for domestic market and further advance trade potential.

There is none single solution or approach to combat income inequality and related social issues. A Combination of internal policies, private sector collaboration, and utilize of global financial and trade market would create effective vehicle alleviating income inequality.