Reducing income inequality while boosting economic growth Research Paper

Reducing income inequality while boosting economic growth - Research Paper Example OECD countries entail five groups with regard to their patterns of inequality. For instance, nations like Australia, Ireland and United Kingdom and the Holland reflect dispersed wages and high part- time employment share, putting inequality in labor earning at above the average of the OECD. Means- investigated transfers of public cash and progressive taxes for household reduce the general inequality in income, but it retains its position above the average of the OECD. Similarly, some Nordic nations and Switzerland all entail comparatively low income of labor inequality due to narrow dispersion of wages and high rates of employment. Can transfers are normally universal; hence, they are less redistributive. Inequality in income for such a group is significantly below the average of the OECD. Empirical analysis by Garicano reveals that despite the critical role played by technological change and globalization in fueling labor income distribution, the variation in marked cross- country i s certainly because of differences in institutions and policies. Consequently, a scholar can deduce the following conclusions about the policies and the institutions: firstly, policies of education matter. Policies that raise rates of graduation from upper education and tertiary education as well as advance uniform education access help diminish inequality. Secondly, well- designed policies institutions of labor market can decrease inequality. A significantly high minimum wage minimizes distribution in labor income, however if set at a high level it may diminish employment; hence, dampening its influence on inequality- reducing. Arrangements of institutions that uphold trade unions...The paper presents a modern comprehensive analysis of the state of income inequality in the OECD countries, identifies factors behind such income distribution and offers policy measures to reduce inequality, while maintaining high levels of development. The paper identifies patterns of inequality betwee n OECD countries and demonstrates a new analysis of policy together with non-policy drivers in the countries It has sketched a comprehensive portrait of rising inequality in income among the OECD.It has reviewed changes in the factors, that stipulate such state of things, and it has examined their significant influence on inequality. Particularly, it has examined the role of technological changes and globalization as well as regulatory reforms in tax regulations and benefit. It has assessed what a government can do in addressing rising inequality and it has concluded by examining the likely certain policy avenues. The analysis revealed that income inequality prior to transfers and taxes is entirely driven by labor income diversion and the existence of inactivity and part- time employment. A significant finding reveals that education and policies of anti- discrimination, fully developed institutions of labor market and progressive systems of tax transfer can all help moderate inequality in income. Certain tax reforms and systems of transfer comprise a double divided in inequality diminution and increase of GDP per capita. The paper discussed other reforms such as trade- offs between the policy objectives