Factors of Income Inequality
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Introduction to Income Inequality
Income inequality is generally termed as unequal distribution of income or wealth to the individuals or the population residing in an economy (Aaberge, Bjorklund and Wennemo, 2002). The income inequality can also be defined as that how equally and unequally the income or the revenue generated by the business unit is being distributed in the society. The main reasons of inequality in income are due to gender discrimination, religion, social status etc. Further, it may also be defined as the major gap between the rich class people and poor people. The UK features wide level of income inequality as compared to other countries. With the emerging market like India, China they are generating the income and revenue to become the competitive leader in the marketplace. The workforce in these countries are becoming highly skilled. As, the result of this wealth is being shifting from the developed countries to the developing countries.
The present report measures all the aspects of the income inequality that give rise to high crime rate. While, the report will also focuses on that how the global income inequality also heavily impact on the increasing crime rate and also render measure impact on the labour market. The report also focuses on the relationship between the income inequalities and incidence of the crime rate in the global economy.
Theme: The impact of global income inequality on the country's crime rate or labour market
In the contemporary market scenario with the increasing economic growth, the country engages in increasing the inequality among their individuals or the population (Subramanian and Kawachi, 2004). The income inequality depicts the higher income gap between upper class and the lower class. Income inequality has been consider as the top most reason for exploding the crime rate in the different nation. While, it has also been measured that the United states features the high level of the income inequality and the country also possess the large gap if the income inequalities. However, the income inequality has been introduced in the businesses by providing less wages and remuneration to the skilled worker as compared to other workers. The income inequality within the business is the crucial concern for all the leaders and managers. The inequality will also result in lowering the productivity while, the income equality result in enhancing the productivity for attaining the higher profit (Gupta, Davoodi and Alonso-Terme, 2002). The major factors that have driven the income inequalities in the marketplace are enlisted below:
Flexibility in the labour market: The largest factor that have been the major driver for increasing the inequalities are flexibility in the labour market. The flexible labour market does not follow the strict rules and regulations framed by the government . They follow and set their own regulations and the wage structure. Hence, this result in the global inequality (How Income Inequality Affects Crime Rates, 2015). The labour market that features the low flexibility is being chained by certain laws and the regulation that is minimum wage etc.
Increasing globalization: Another major cause of the global income inequalities include increasing globalization. It is being liable for exploding the inequality in income level between the individuals residing in the subsidiary country and the individual from the parent country (Krueger and Perri, 2005). For example, with the increasing globalization, the multinational corporation outsources the production processes and the workers from the parent country to the subsidiary country. So, it will lead to gain the inequality between the skilled worker from the parent country and the workers of the country in which the MNC has imported the production process.
Change in technology: Although the advancement or change in the technology has raised the productivity of the business unit but has played a vital role in increasing the global income inequality (Mansyur, Amick, B and Franzini, 2008). With the change in the technology the business unit will rise the demand for hiring the highly educated workers as compared with the lower skilled workers so that they should result in adopting the technology.
Lack of financial inclusion for the developing countries: The business unit in the developing countries mainly features the situation of income inequalities (Dollar and Kraay, 2001). As, with the increasing globalization the developing countries require the huge financial resources for satisfying the requirement of the business unit so that they should render proper service remuneration to all the employees whether skilled workers or the lower level worker.
While, measuring all the above factors that act as the driving force for raising the inequality it can be stated that the income inequality well drastically impact on increasing the country's crime rate (Mellor and Milyo, 2002). There is a positive relationship between the income inequalities and incidence of the crime rate in the global economy. It mainly results in gaining the poverty, the consumption and the purchasing power of the customers will decrease due to inflation, middle class individual will borrow the money for consuming the products etc. while, the income inequality among the population also result in increasing the crime rate in the different countries in form of Homicide, Murder, rape etc (Weich, Lewis and Jenkins, 2001).
While, measuring all the above factors that act as the driving force for raising the inequality it can be stated that the income inequality well drastically impact on increasing the country's crime rate. There is positive relationship between the income inequalities and incidence of the crime rate in the global economy. It mainly result in gaining the poverty, the consumption and the purchasing power of the customers will decrease due to inflation, middle class individual will borrow the money for consuming the products etc (Riskin, Zhao and Li, 2001). the global income inequality in the developing countries can also being measured by the market exchange rate versus the purchasing power parity. while, the income inequality among the population also result in increasing the crime rate in the different countries in form of Homicide, Murder, rape etc. The effect of the inequality in the income will be on the well-being of the individual, criminality, education etc.
According to Subramanian and Kawachi (2004) due to poverty and lack of food, an individual gets engaged in the illegal and crime activities. With the effective justice system, formation of policies and laws, change in the social norms, more strict punishment etc., it will result in reducing the crime rate from the country (Aaberge, Bjorklund and Wennemo, 2002). There is huge rise in the income inequality in the U.S. From the last many years that often result in violent crime. The U.S. is ranked as the top 3rd nation with the most income-unequal, increasing wealth gap in the market etc. The income inequality has negatively impacted the UK region and often result in gaining the discrimination among the individual rendering the services in the business unit (Clarke, Zou and Xu, 2003).
With the high inflation rate in the UK economy the business unit prefer to render the low income to the individual that render the service in the organization. Thus, will reduces the purchasing power of the individual in the market. Hence, the reduced purchasing power will result in contributing to the crime rate in the UK. According to the statistic, it has been stated that the income inequality has drown fastest in the UK region as compared to the other countries in the world that is the best people in the UK receive 40% of total income while the poorest or the low staff get only 10% of the total income (Xiaolu and Gang, 2005).
In the year 2010, the report by United Nations Office on Drugs and Crime (UNODC) stated that global income inequality has been resulted in increasing the violent crime and the property crime. Homicide is the top most crime that results due to high income inequality at the workplace. For example, The worker, if not being treated properly or may not be provided with the adequate remuneration or the wages according to the service that they render in the business (Sturm and Gresenz, 2002). The frustration of inequality sometime may lead to intentional homicide. According to the report of UNODC in the year 2012, it stated that the statistic of homicide for the year was 7 out of the 100,000 population. Another consequence of the income inequality in the business will also result in ensuring the murder of the top authority or the management personnel due to income inequality. According to Atkinson (2003) it has being stated that on the average in the Britain the rate of the murder was around 1.8 per day. With the drastic increase in the inequality at the workplace and the increasing poverty the rate of crime rate was constantly increasing in the UK.
There is correlation between the crime rate and the inequality in the income at the business unit (Muller, 2002). The low or reduced level of income in the business will also result in the following situation:
Increase in the crime rate: The high inequality at the business unit sometime lead to increase the aggression of the personnel that will ultimately result in getting into an illegal action or the crime. This is the drastic affect of the income inequality. Sometime the income inequality should also be result by ensuring the discriminating practices at the workplace. The discrimination should be on the basis of caste, religion or gender (Firebaugh, 2003).
Increasing borrowing from the bank: While, the inequality in the income of the population will also result in increasing the borrowing activities of the individual. The reduced income will not able to fulfill the needs and requirement of the individual in the UK so they should be engage in the borrowing activity form the bank so that they can consume the goods and product for satisfying the needs and expectation. Thus, the borrowing money or taking loan from the bank often sometime result in gaining the financial crises.
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There will be huge impact of the global income inequality on the country's crime rate. As, the income inequality in the global economy will result in increasing the poverty rate in the country (Subramanian and Kawachi, 2004). Thus, with the increasing poverty rate the country will tends to increase the crime rate. So, it can be said that with the increase in the income inequality the country will also raise the crime rate in respect with the inequalities. It is also indicated that the change in the rate of poverty will also be related to the frequency of crime in the different countries. That is, when there is decrease or reduction in the poverty because of rise in the income growth and the effective distribution of income among the workers and employees in the business unit, will result in lowering the crimes rates in the country (Gupta, Davoodi and Alonso-Terme, 2002).
From the above report it can be concluded that income inequality has been the top most reason for increasing the crime rate min the various countries. While, it has also been concluded that the United states features the high level of the income inequality and the country also possess the large gap if the income inequalities. The report has been concluded that there are different factors that act as the forces for growing the income inequalities in the countries, such as adoption of the technological changes, increasing globalization, changes in the policies of the countries etc. while, the report has also measure the certain elements that will help in tackling the poverty and the crime rate in the global countries that is by ensuring the education in the market, flexible labour markets, strict policies and laws for reducing the crime rate. The report also suggested that there is positive relationship between the income inequalities and incidence of the crime rate in the global economy.
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