Income determination - Research Proposal Example

Income Determination Problem ment Income distribution and disparity poses escalating challenges to regional development basedon uneven distribution of economic resources. In essence there exist a variety of loose ends based on limited evidences directly linking macroeconomic and microeconomic factors to income disparity despite its associated critical policy implications. Regional imbalances have been reported amongst different countries. Many policy makers in the respective countries are thus, disturbed by an urgent need to establish and implement working models upon which income determination can be framed.

Consequently, this topic has become attractive making many researchers to shift attention towards the same as a vital dissertation topic. Surprisingly, unearthing the variety of macroeconomic and microeconomic factors to be incorporated in the computation of income, stands erected as the major stumbling block despite the recent research benchmarked against much effort and focus peddled to weed out this phenomenon. Research Question Difficulty to determine the essential macroeconomic and microeconomic elements to be included in the determination and computation of income is accountable for regional economic imbalance.

Literature ReviewAccording the research findings of Michael Sare pegged at showcasing the inevitable and direct relationship between income distribution and macroeconomic factors, (The Cross Country 1997), real depreciation for LDCs, trade improvements, higher income, growth rates, and high investment rates are the vital variables associated to regional income determination. A reciprocal relation is also looming between investment and growth-facilitating policies and enhancement of in income distribution.

Public expenditures and inflation are the centerpieces as policy variables that have greater magnitudes on income distribution. Income distribution attaches so little to inflation fluctuations, price ratio of investment, external position, level of real change and changes in public consumptions. People employ a tendency to trade off between equity and growth and attaches disadvantaged economic segments as the significant beneficiaries of economic growth. According to Deininger and Squire (1996), unearths beneficial evidence linking proceeding growth to initial income disparity.

Bruno, Ravallion and Squire (1996), showcased that subsequent growth is attached to preceding distributed endowments of income and assets, and that, poverty eradication impacts is more felt by LDCs as compared to developed countries based on growth processes. With respect to Milanovik (1994), sets to illustrate unique reason behind lower income inequalities in developed nations as resulting from not only significant of social choice elements such as employment and income redistribution policies but also structural determinants (rural-urban characteristics and employment).

Research DesignThe research aims at unearthing sound ground upon which income determinants are to be properly unearthed in order to weed out income inequality. Both primary and secondary data will be gathered based on application of both primary data collection driven by such methods as interviews and questionnaires as well as review of already essential documented statistical data drawn from internet sources peddled by application of working search engines and retrievals from relevant textbooks.

Analysis will be based on regression and correlation mechanisms and models to showcased inevitable and reciprocal relations between macroeconomic and microeconomic factors to income distribution and determination. Such statistic as coefficients will form the centerpiece upon which rational decision leading to sound policies and subsequent implementation will be drawn. The conclusion drawn will form major steps towards ensuring proper incorporation and inclusion of strictly necessary essential determinants of income which will culminates into reduced cases of regional imbalances.

Reference Milanovik, Branko, (1994), “Determinants of Cross-Country Income Inequality: An Augmented Kuznets’ Hypothesis, “World Bank Policy Research Paper, No. 1246. Washington: World Bank, January. Schmidt-Hebbel, Klaus, and Luis Seven, (1996), “Income Inequality and Aggregate Saving: The Cross-County Evidence,” World Bank Policy Research Working Paper, No. 1561.Washinmgton: World Bank, January).