Impact of Income Inequality
Part A
Impact of Income Inequality.
Income inequalities In New Jersey have remained relatively steady in the last four decades. Inequality can be informed of gender, politics, and race. Nevertheless, the difference is the wage gap between the rich and the deprived. Several studies have reported that income inequality has been on the rise in the past century, which has led to a heated debate in recent years. The increasing wage inequality has become a significant challenge at present. For instance, in New Jersey, the wage gap between the wealthy individuals and the disadvantaged has reached its uppermost levels in the last decade. The tread has further diversified into developed and developing marketplaces such as china, with some experiencing diminishing inequality(Mion, & Zhu, 2013). On the other hand, there has been universal inequality in accessing better health plans, education, and finance by individuals with a low income in New Jersey.
In regards to the impact of income inequality, there has been marketplace instability in New Jersey. There have been changes in the working force, which has resulted in an ever-changing working-structure. This has resulted in a stealing class of rich people and a lowly paid working class. On that note, professional reforms and income inequality has turned out to be a healthy debate. These papers intend to discuss the effect of income inequality in New Jersey. It will also explain the theories behind income inequality and the mitigations that can be undertaken to solve the problem.
Part B
Solution argument
The main outlook revolving around Income Inequality is the polarization theory and the job-skills mismatch theory. They both explain the changes within the structures of the labor market and the changing economy. Mismatch theory states that there is accumulative fairness in the skills required for technology and insufficient training. The approach focusses on technology leaving behind unqualified individuals, especially the disadvantaged and women.
The other theory revolving around income inequality is the polarization theory. The method, in some way, states a dissimilar description. This happens when individuals get divided into contrasting groups of high income and low income/ economic displacements. The theory states that the changes in the innovative service economy can lead to a growing divergence of work distribution. That is the raise in the advanced levels of occupations with an increased salary and insurance cover as an added advantage. They are thus resulting in fewer earnings and reduction in numerous jobs. On that note, income inequality from polarization theory is as a result of employment demand, and therefore teaching programs cannot decrease income inequality (Goos, et al2014).
Several research reports have stated that polarization theory and mismatch theory have not increased inequality as compared to the globalization era (King, 2013). This has led to ordinary trading hence leading to disparities in accessing job opportunities, health care plans, better earnings, and education.
Part C
Application of solution
As a result of the Mismatch theory, an individual can expect an increase in income distribution. However, an increase in inequality is a result of unqualified personnel. The way out to this kind of problem is investing in human capital (Bakija et al. 2012). This will intern change the supply-demand, and hence inequality will reduce. On the other hand, the consequences of ordinary trade in an economy have increased inequality and therefore leading to fewer job opportunities. For that reason, the liberalization of employment will intensify the relative value of labor in the case of industrialization in New Jersey. This will result in an increase in income inequality and reduced job opportunities.
In contrast, technological advancements have facilitated New Jersey in production output. This has resulted in increased wage inequality by giving out two different groups; the haves and the have not. Nevertheless, an increase in income inequality distribution in New Jersey has not necessarily contributed to the evil entity in New Jersey. On that note, the government can freely support innovation and reduce income inequality. The income inequality created as a result of divergence can be quite destructing due to employment demand (Mishel et al. 2013). We can, therefore, conclude that increasing inequality is a result of unqualified persons. The way out is investing in human capital. In conclusion, those who benefit most from the advanced technology are the individuals with the skills and creativity.
Reference
Bakija, J., Cole, A., & Heim, B. T. (2012). Jobs and income growth of top earners and the causes of changing income inequality: Evidence from US tax return data. Unpublished manuscript, Williams College.
Goos, M., Manning, A., &Salomons, A. (2014). Explaining job polarization: Routine-biased technological change and offshoring. The American Economic Review, 104(8), 2509-2526.
King, C. R. (2013). Inequality and opportunity at the Msa-Level: Investigating place as a structure of inequality shaping mobility and earnings. The University of South Carolina.
Mion, G., & Zhu, L. (2013). Import competition from and offshoring to China: A curse or blessing for firms? Journal of International Economics, 89(1), 202-215.
Mishel, L., Schmitt, J., &Shierholz, H. (2013). Assessing the job polarization explanation of growing wage inequality. Economic Policy Institute. Working Paper.