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Buildings in Rio de Janeiro, demonstrating economic inequality. Effects of income inequality, researchers have found, include higher rates of health and social problems, and lower rates of social goods, [1] a lower population-wide satisfaction and happiness [2] [3] and even a lower level of economic growth when human capital is neglected for high-end consumption. [4]
The "Great Gatsby Curve" is the term given to the positive empirical relationship between cross-sectional income inequality and persistence of income across generations. [1] The scatter plot shows a correlation between income inequality in a country and intergenerational income mobility (the potential for its citizens to achieve upward mobility).
Wealth is affected by movements in the prices of assets, such as stocks, bonds and real estate, which fluctuate over the short-term. Income inequality has significant effects over long-term shifts in wealth inequality. Wealth inequality is increasing: The top .1% owned approximately 22% of the wealth in 2012, versus 7% in 1978.
Economic inequality is an umbrella term for a) income inequality or distribution of income (how the total sum of money paid to people is distributed among them), b) wealth inequality or distribution of wealth (how the total sum of wealth owned by people is distributed among the owners), and c) consumption inequality (how the total sum of money spent by people is distributed among the spenders).
The pandemic induced a significant economic toll on Americans, per a recent report, which indicated income inequality increased by 1.2% — as measured by the so-called Gini index — between 2020 ...
[38] [39] More recently, the so-called "Rajan hypothesis" [40] posited that income inequality was at the basis of the explosion of the 2008 financial crisis. [41] The reason is that rising inequality caused people on low and middle incomes, particularly in the US, to increase their debt to keep up their consumption levels with that of richer ...
Income inequality generally reduces government net lending/borrowing for all the countries. Economic growth, they find, leads to an increase of income inequality in the case of the UK and to the decline of inequality in the cases of the US and Canada. At the same time, economic growth improves government net lending/borrowing in all the countries.
Countries' income inequality as of 2018 according to their Gini coefficients [11] World map indicating the Human Development Index in 2015. Quantitative measurement of the impact of welfare programs on poverty provides different estimates depending on the study design and available dataset.