The Importance Of Income Inequality

Submitted By blackboard01
Words: 516
Pages: 3

In contrast, the supply of a skilled profession, i.e. a doctor, will be very inelastic because it requires a lot of training to gain the qualifications. Moreover, the demand tends to be high as they significantly affect the production, and therefore profits, of an organisation. As a result, organisations are willing to pay greater salaries to such roles. This creates a distribution gap in income, which widens the income inequality. In addition to this, qualifications and training are investments in 'human capital', in which the individual will postpone immediate income, and endure education/ training, in the hope of higher earnings – for example, one study by Gosling found that 30% of disparities in hourly make wages are explained by educational differences . He also noted how the introduction of new technology has resulted in demand increases for more skilled workers, subsequently leaving low skilled workers earning in lower paid jobs. As a result, the occupational position influences income distribution.
In addition to this, there are other circumstances which effect; many groups can maintain high earnings and limit supply as they have control over the supply of labour – this is seen notably in professional bodies. Whilst other groups have differing 'degrees of unionisation' and 'industrial power'; for example Gosling found that wage inequality increased as trade union influence weakened .
Furthermore, a study by Johnson and Reed shows that income level and ‘unemployment experiences' of fathers are related to subsequent experiences of their sons. Their case study showed that the sons of fathers, who represented the bottom 20% of earners were over three times more probable to stay in the same income bracket. This is aligned to the generalisation that the number of single parent families is increasing, whom usually undertake part time/unskilled occupations – which has widened the income distribution gap. Incidentally, Gosling also did a study on sex gender and found that women earn only 61% of men’s wages ; it appears that women’s relative income differ to men within