Income Inequality In Australia Essay

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There is a substantial amount of inequality with regard to the distribution of income in Australia. Sources say it is becoming slightly worse in recent years. In 1999-00, top 20% of income recipients accounted of 48.5%. They had average weekly income over 12 times higher than the average income of the bottom 20%. The bottom 60% of income recipients receive less than 30% of total income. There are economic and social advantages and disadvantages of inequitable distribution of income. Economic benefits occur when there is an increase in the productive capacity of resources and thus an increase in real GDP per capita. The first benefit is that the labour force is encouraged to increase education and skill levels. Since jobs with higher qualification and skills provide higher income, the labour force will want to improve their education and skill levels in order to receive a higher income. Thus there is an increase in the quality of the labour force. Secondly, the labour force is encouraged tow work longer and harder. The longer the hours you work, the higher the income you will get. Therefore it produces an incentive for workers to work longer and overtime, which enhances economic growth. In addition, the higher pay for increased output will encourage labour to move where it is most needed. A more mobile workforce will lead to a more efficient allocation of resources and a higher rate of economic growth. Our Service Can Write a Custom Essay on Income Inequality for You! Entrepreneurs are encouraged to more readily accept risks associated with business. If they do not receive bonus for their risk taking, there will be fewer entrepreneurs and therefore a lower rate of economic growth, less jobs and a reduction in their productive capacity in the economy. Last but not least, there is a potential for higher savings and capital formation. Since there will

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