Income Inequality

Distribution of income is one of the major ways of measuring the economic well-being of a country’s population. Difference in income levels is characteristics present in all economies. At any point in time, there are individuals and households that receive moderately less income while others earn comparatively leading to a distribution of incomes. The variances arise for a number of reasons including personal choices and inborn traits that encompasses age, intelligence and choices made over work life balance as well as opportunities and inheritance. The individual disparities combine with broader economic forces and policy settings to affect the distribution of income over time. Measurement and analysis of income distribution focuses on both individual and household level as both are influenced by different interrelated factors. Household income is affected more by macroeconomic factors such as demographic, social and economic influences. Economic growth is associated with rising income levels but there has been witnessed income inequality among citizens of various income levels in the economy. Income inequality has attracted both national and international interest and research undertaken among Organization of Economic Cooperation and Development members ignited worldwide remarks and inequality was declared an economic hazard.
In the past two decades, Australia has impressive and constant economic growth. Consequently, increased returns from both labor and capital have benefited households in different income levels. For the period between 1995 and 2009, Australia had the second highest average income growth among OECD countries. Citizens in the lower income levels bracket registered a three percent per annum increase in income ...

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...ties are available to the greater percentage of the citizens. The exclusion of women from economic participation in these countries denies the economies substantial economic contribution that would otherwise been made by this excluded population segment. Similarly, income inequality in Australia would, in the long run, suppress economic growth and every citizen would emerge a loser. The government has a responsibility to put in place policies that limits the current economic exclusion where opportunities are available to a few well-off citizens denying millions of Australians their right to economic participation. Consequently, the economy would benefit more through the multiplier effect of increased consumer expenditure and taxation. In other words, income inequality is bad for the Australian economy particularly its long term effect of stifling economic growth.