Income Inequality and Poverty - Research Proposal Example

• Introduction

According to Ryscavage (2015), unfair distribution of income as well as economic growth has led to the challenge of facing an economic crisis. Due to this reason, the gap between the rich and the poor has further increased. Some of the reasons leading to income inequality include; bias of employment in terms of race, gender and social status. This study examines the issues that come about due to income inequality. Moreover, it focuses on poverty as the main challenge that needs to be elevated from the United States economic status.

• • Background of Study

Over the years, United States of America has taken pride of its stable economic status. However, the country has faced recent challenges in regards to poverty which is directly linked to income inequality. This situation has continued to increase despite efforts to use government anti-poverty strategies to curb this tragic issue. As the rich people in America continue to enjoy the fruits of the booming stock market, competitions becomes even stiffer making the issue of economic inequality increase on a daily basis (Emerald Group Publishing Limited, 2015).

• • Purpose of the study

This study was carried out in order to give a clear insight of the income inequality issue in the United States of America as well as how it influences the American economy. Moreover, it looks at possible solutions and recommendations that can boost economic equality for all citizens with the aim of stabilizing the American economy.

• • Significance of the study

This research is important because it elaborates on the level of income inequality as a challenging issue in the United States of America. Moreover, brings out the possible strategies and solutions that can be applied to curb this issue.

• • Study Objectives

The outstanding objective for this research is to bring out a clear picture of the reasons behind economic inequality and poverty using a case study of the United States of America. Moreover, it makes use of credible secondary sources of research such as academic journals, articles and books as the major materials for the study.

• Theoretical Framework

This research is based on the neo-classical growth theory. In this case, the theory elaborates the possibility of calculating the level of economic growth across different countries. This is done by evaluating the changes in productions in relation to those resulting from the output. Furthermore, human labor, capital, technology as well as physical capital are used in combination to evaluate economic growth. This theory assumes that issues of production directly correlate to human beings. Therefore, it is possible for individuals to increase or decrease economic growth through their actions. This theory relates to the study because it evaluates in detail the factors that lead to economic growth. So to speak, economic inequality; as well as poverty directly link to a country’s economic status (Bishop, 2008).

• Literature review

Over three decades ago, China decided to restructure its economy from a socialist-planned economy to a market economy. Over this period, China has enjoyed massive growth of the general domestic product, which as a result has improved living standards for citizens (Bishop, 2008). However, this growth in economy has resulted to a massive challenge of economic inequality. More often than not, growth is associated with the early stages of economic impersonation that starts in particular regions as well as sectors (Li& Sicular 2013). As these sectors and regions move ahead of others, the distribution of income increasingly becomes unequal. Changing from a socialist planned economic system to a market economic system also increases unequal income because of the features such as egalitarian wage and distribution of income. Further, markets are seen to bring about differences in income which are derived from risks and uncertainties. Moreover, people and families are separated on the basis of their level of production, financial stability, the effort put in work and the amount of wealth they have accumulated over time. On the contrary, these inequality sources can be a good way of motivating people to take risks, work harder and invest wisely. As much as economic inequality is associated to the early stages of economic transition, this situation can be elevated or halted. When the economy stabilizes, it should spread to other regions and sectors which will thus increase employment opportunities that bring high wages; thus solving the problem of economic inequality (Kaplinsky, 2013).

According to Li& Sicular (2013) the common notion that involvement in the global economy automatically provides a solution to the challenge of economic inequality as well as poverty. As much as globalization plays a key positive role in reducing economic inequality and poverty, this chance should be taken advantage of through the utilization of clear focus as well as effective management of innovation. Notably, as much as globalization may be a positive tool for economic growth, it sometimes may increase chances of unequal economic growth and poverty. Further, it is argued that poverty is directly as a result of producer’s failure to relate with the changes of globalization. It is agreed that the levels of poverty and inequality will reduce by huge amounts if producers actively involve themselves with the activities of globalization. Producers who fail to actively compete with others in the production of surplus outcome are likely to face economic inequality as well as poverty.

• • Research Questions

The topic under study is based on the below research questions:

RQ1: What solutions can be applied to solve the issue of economic inequality and poverty in the United States of America and the world at large?

RQ2: What are the current strategies being applied to counter economic inequality and poverty and what are their effects?

RQ3: Is it possible to completely abolish the problem of economic inequality and poverty in the world?

RQ4: How and why will the dismissal of economic inequality pave way for a better future?

• • Hypothesis

This study is based on thee below hypothesis:

H1: Income inequality and poverty directly affects the economic stability of a country.

• Methodology

This research was conducted using content analysis method of secondary materials. The study analyzed academic different articles, journals, periodicals and books. Only relevant information in regards to economic inequality and poverty was used. Moreover, information from other countries on the related issue was considered so as to create variety and comparison of how the problem affects citizens as well as ways used to counter it. This research was conducted over a period of ten working days in order to ensure intense research was conducted to bring out correct, factual information. The sources that were used were dated from five years and above to the recent year so as to avoid redundancy and provision of irrelevant information. Also, using the above mentioned secondary sources of information was beneficial because information could be verified through counterchecking the used sources.

• Findings and Discussion

In reference to the first research question, the government should step in to offer employment opportunities to unemployed citizens in order to counter income inequality. Other strategies include; ensure fair taxing, uphold and engender programs relating to safety net, encourage uniform bargaining, give access to a better understanding of the financial markets, increase employee minimum wage as well as the total salary, implement subsidies that result to increased income, promote programs where individuals can get income as they gain knowledge, apply authoritative laws that ensure full availability of jobs and manage imports to ensure they do not exceed the exports (Kaplinsky, 2013).

Findings from the second research questions show that increasing minimum wage has not only helped to curb poverty but also ensured that employment and economic growth is not tampered with. Additionally, increasing the earned income tax has benefited poor children and single parents who are working. Less income families have benefited from policies that encourage saving and low costs of building assets. Promotion of education has worked positively in reducing the economic inequality gap because through knowledge, individuals become productive and skilled for employment. In response to the third research question, chances of ending poverty and economic inequality are slim. However, through effective application of the above strategies and more, these challenges can be reduced (Kaplinsky, 2013).

In relation to the fourth research question, ending economic inequality will lead to a better future. This is because economic equality results to better living standards of citizens due to the fact that they are employed and can cater for their daily needs. Moreover, the future generation will enjoy economic growth and stability (Kaplinsky, 2013).

• Conclusion

In conclusion, it is evident that poverty and economic inequality is an issue not only in the United States of America, but the entire world as a whole. Unfortunately, this issue has not been given the necessary attention in regards to finding solutions to end the problem. Income inequality affects individuals on the basis of gender, race and religion.

Strategies such as employment on the basis of qualification rather than bias, promotion of education, management of income tax, increase of employee wages and application of policies that encourage saving will reduce the level of poverty as well as income inequality. As much as it is nearly impossible to end the above issues indefinitely, it is important for future research to come up with ways to reduce the problem in order to better the lives of all citizens.