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New Scientist article New Science: “What will you get?
How much will you pay?” asks economist David Pogue.
“How much will your income go up?” he asks.
“Will you get a tax credit?”
“Will I have to pay a bit more to live?”
“And what will happen to me if I don’t have enough?”
“Income inequality is a big problem, but this is just the start of it,” says Pogue, who is an economics professor at the University of Texas, Austin.
He is also a professor of economics at the Graduate School of Business at the Massachusetts Institute of Technology.
In the last few years, Pogue and a team of colleagues have published a lot of research that suggests inequality in income and wealth is growing, and that in some countries inequality is increasing faster than in others.
The new research, published in New Scientist, looked at how countries around the world deal with the effect of income inequality.
“The rich have got more, and the poor have got less,” says James Pethokoukis, an economist at the New School in New York City and co-author of the study.
How much income inequality does inequality increase?
Using data from the World Bank’s annual World Economic Outlook (WEP), researchers found that countries with higher income inequality had more inequality per capita than countries with lower income inequality, and vice versa.
The WEP calculates the income distribution as the ratio of a country’s share of national income to its share of world income.
From 2006 to 2012, the WEP looked at inequality in a number of countries.
This year, the researchers looked at the share of income earned by the top 1% of earners in different countries.
The researchers used data from an OECD database to calculate how much income each country’s top earners earned from 2009 to 2013.
The researchers looked specifically at income inequality in Africa and Latin America.
There, the top earners are earning roughly half of their income from income earned from capital gains and other sources, compared to about 30% in the United States and just 20% in Europe, says Pethos.
In the Middle East and North Africa, it’s close to 50% in both countries.
But the researchers note that the data from other countries could be affected by the effects of terrorism and conflicts, so this is not an apples-to-apples comparison.
Pethokokoukins says the most important thing is to understand the effects inequality has on people.
“There’s lots of research showing inequality is bad for a lot different things,” he says.
What are the benefits?
“It’s not just the income that’s going up.
There are lots of things that are going up as well.
But there are also more jobs, which are not being created, so that’s a big part of it.
There’s also lots of new opportunities for young people and people in particular, who have been struggling to get a foothold in the economy.”
So, what is the main thing that people are talking about in terms of their experience?
Well, there’s probably not enough of it, says David Kamin, a professor at Rutgers University.
“But, there is more than just that,” Kamin adds.
Where are the jobs?
Peretz and Kamin say there are about 400 million jobs in the world.
About 10 million of those jobs are in the US, and about 30 million are in Europe.
“It is true that there are fewer people working in the financial services industry, and more in health care, and less in the health care and retail sectors,” Pethoks says.
But they say there’s a lot more going on in the global economy than just the finance sector.
“The whole economy is bigger than that,” Pemkos says.
“So, the number of jobs in that sector are much more important than the number in finance.”
What is the most common reason for inequality?
Income is the biggest driver of inequality, but Pethohs says that’s not always the case.
“A lot of people think it’s because they are less productive,” he explains.
“But they are not.”
Pethoks adds that income inequality may be caused by a combination of factors.
“People might be getting richer and richer, but the economy has been stagnant for a long time,” he adds.
“They might be earning less than they used to, but they’re not earning as much.
So, they’re living in a different place.”