jk said:
both marcoeconomic & microeconimic approaches can be used to reduce the level of income inequality..
firstly, gov can reduce inequality by reducing unemployment rate which could be done thru expansionary macroeconomic policies..
more spending on welfare system + progressive taxation could also be methods.....
microeconomic reform of labour market for higher efficiency could also b the way to reduce unemployment , which will also reduce income inequality
and....effort to reduce inequality of wealth could also be done by gov as income and wealth have correlation..
hope it helps...that's all i can come up with now
oh my
unemployment is correct
get people out and in the workforce earning more than the two dollars centrelink gives you
Expansionary macroeconomic policies or stimulatory methods do not address inequality directly.
Decreasing the Bracket sizes in the progressive taxation system is a fundamental possible policy. Eliminating "bracket creep" of those in lower incomes, forced to pay higher taxes and slide back down the slippery dip of income earners. Creating a more exclusive and detailed system of spending and taxation. (Family spending, child support for single parents (lowest income earners), disabled benefits)
Funding of Public Charitable organisations
Microeconomic Reform:
No!
I'll tell you why
first off;
When you have income inequality, an economic benefit pointed out in all hsc textbooks...even the crappy ones, is the occurance of more productivity. People are encouraged by the thoughts of attaining a higher wage, and are forced to work harder, longer and replace portions of their leisure time for income. (leisure is an opportunity cost/ effect is called the substitution effect)
Microeconomic Reform is almost entirely unnessecary when addressing income inequality.
secondly
To reduce costs, most employer's do not want to spend money to do so. Easiest factor of production today to get rid of; Good ol' Bob on the minimum wage. Also Structural change in industries may just result in structural unemployment.
Also, because wages make up the income of most people, and people on lower incomes soley rely on government payouts and wages, addressing wealth will only have impacts on the other strata.
The point is, when looking at policies look strictly at fiscal policy, and the reformation of some of the systems in place. In terms of wages look at the "Safety Net Wage", compulsory Superannuation. Most of the time working on the upper strata of income earner's is pointless as a large percentage earn income and wealth from capital, assets and other forms as well as wages, and make up that difference quicker than the government can take.
Note: When discussing the Australian economy
DO NOT USE THE QUOTE (CLICHE) : "THE RICH GET RICHER AND THE POOR GET POORER"
Simply not true.
Growth in equivalised household disposable income has shown that all bands of earners in Australia have a greater amount to spend than they did before. It is just that the lower income bands have not grown
as much as the higher bands.
Godspeed
