Income Inequality: Impact of Social Structure and Personal Factors

There are wide varieties of inequality in the economy which is commonly measured by income or wealth distribution. Moreover, a lot of social structure factors greatly influence this lack of equality. For example, social and personal differences. Income inequality is still existing in modern society. Furthermore, it has increased since the 1980s according to a report by the Organization for Economic Cooperation and Development (OECD).

As the reality of economic imbalance is still occurring. Therefore, it is important to understand what people think causes the widening of income inequality. Respondents from different regions (i.e., Asian, Africa, Central & Northern America, The Carribean, Europe, Middle East, and Oceania) have participated in this survey with over four hundred sixteen thousand participants.

Highlights

• Most of the respondents believe improving the social welfare system can lessen the gap in income inequality
• 6% believe that the biggest personal factor that worsens income inequality is educational level in the country
• Majority agrees that social structure affects income inequality more than the personal factors

Inequality Over The Past Decades

Respondents highly believe that income inequality increased significantly over the past few decades. As a result, 53.6% of the overall participants have answered ‘Yes on this question. Meanwhile, only 23.3% responded that they don’t think income inequality increased over the years. On the other hand, 23.1% do not know if it increased or not.

Social Structure Factors and Personal Factors on Income Inequality

Basically, people are more convinced that social structure affects income inequality more than personal factors with 17.3% difference.

For social structure factors, the top factor is the social welfare system with 34.7%. Therefore, providing financial aid to individuals or families in need is the main factor that worsens economic inequality. Then there is the flexibilization of the labor market with 25.5%. This means that the implicit promises to employees for lifetime job security is somehow making an impact on inequality.

On the other hand, we have race, gender, educational level, property owned, and inherited assets that are categorized in Personal factors.

Moreover, 26.6% believe that the biggest personal factor that worsens income inequality is educational level in the country. Followed by race as the second biggest factor with 23.3%. It implies that people believe racial factors are still a prevailing concern and affects the lack of equality. With a close percentage gap of just 0.4%, gender is another personal factor that people feel affects economic inequality.

Important Factors to Lessen the Gap in Income Inequality

Most of the respondents believe that the most important factors that will lessen the gap in income inequality are improving social welfare systems and increasing flexibilization in the labor market. 17.5% also agrees that polarization of the labor market will help lessen this margin. Unexpectedly, the wage gap among races and wage gap among gender only gained 12% and 6.8% respectively.

In general, Income inequality can be reduced directly in several ways like decreasing the incomes of the richest or by increasing the incomes of the poorest. Policies focusing on the latter include increasing employment or wages and transferring income.