TheseCountries Have the Widest Gap between the Rich and the Poor
The United States, which prides itselfas a land of opportunity, has the fourth-most uneven income distribution amongdeveloped nations, according to recently-released data. Only Turkey, Mexico,and Chile had worse income inequality, with Chile ranking as the most unequaloverall.
The Gini coefficient measures how much an economy deviates from perfect equality — where everyone has the same income. A score of zeroindicates perfect equality, and a score of one indicates extreme inequality.Based on index figures for Organization for Economic Co-operation andDevelopment (OECD) ｃountries, these are the least equitable ｃountries in thedeveloped world.
The income redistribution structure ofeach ｃountry, which includes taxes, as well as transfers like welfare, socialsecurity, and unemployment insurance, can make a big difference in how severethe gap between rich and poor is. In nations with more progressive systems,income inequality is largely reduced after taxes and transfers are assessed.For example, income inequality in Finland fell from 13th-highest before taxesand transfers to sixth-lowest after they were assessed. On the other side,Israel and Turkey had better than average income inequality before taxes andtransfers but were fifth and third worst, respectively, after taxes andtransfers.
In an interview with 24/7 Wall St., Michael F.Förster, senior policy analyst for Income Distribution and Poverty at the OECDexplained that in nearly every case, taxes actually have less of an impact onthe Gini coefficient than transfers. “In all OECD ｃountries, it is the effectof cash transfers which has a stronger role on redistribution than incometaxes, with one exception.” That exception, he added, is the United States.
Less-wealthy nations do not necessarily have lowerincome inequality. For example, Slovenia had the 11th-lowest GDP per capita andalso the least income inequality. However, most of the ｃountries with thehighest income inequality also have less robust economies and rank inthe bottom half of the OECD for GDP per capita. The notable exception tothat rule is the United States, which had the fourth-highest GDP per capita inthe OECD.
Several of the ｃountries with the highest incomeinequality have issues with employment. On the list are Spain, Greece, andPortugal, which are known for their recent economic struggles and staggeringlyhigh unemployment rates. However, the unemployment rate doesn’t always tell thefull picture. Much has been made of the people who have re-entered the ranks ofthe employed taking lower salaries or part-time work in the United States, andthe effect that has had on increasing the gap between the wealthy and the poor.
Relative to some of these ｃountries, the U.S. actuallyperforms well for the proportion of people in part-time work that have beenforced to take those positions because they felt that had no other options. Försternoted “In the southern European ｃountries – Portugal, Greece, and Spain – thelarge majority is working involuntarily part-time. It’s not part-time or notpart-time, it’s the nature of part-time which ｃounts.” Indeed, in Spain, forexample, two thirds of part-time employees were involuntary, compared to just15% on average across the OECD.
If a disproportionate proportion of the populationlives below the poverty line, national income distribution is much more likelyto be worse. The five ｃountries with the worst income inequality — Chile,Mexico, Turkey, the United States, and Israel — also had the five highestpoverty rates in the OECD. The relationship is not perfect, however. The UnitedKingdom fell just outside the five worst ｃountries for income equality, but itspoverty rate was 13th lowest among developed nations.
To determine the ｃountries with the most unevendistribution of income, 24/7 Wall St. reviewed post-tax and transfer Gini indexscores published by the OECD. We also considered data on GDP growth, education,poverty, job growth, gross domestic product, as well as social spending, allfrom the OECD.
Article Source: http://www.huffingtonpost.com/2015/05/29/ｃountries-rich-poor-gap_n_7471214.html?ir=Business
Image Source: http://themedes.org/wp-content/uploads/2013/07/income-gap.jpg
VOCABULARY WORDS:
1. Deviate (v.) ~ depart from establishedcourse
2. Severe (adj.) ~ very great or intense
3. Robust (adj.) ~ able to withstand orovercome adverse conditions
4. Notable (adj.) ~ worthy of attention ornotice
QUESTIONS FORDISCUSSION:
1. According to the article, what are thefactors that affect the income gap between the rich and the poor?
2. Do you think that there is a wide incomegap between the rich and poor in your ｃountry? Why do you think so?
3. How does a wide income gap affect theeconomic status of a ｃountry?
