Per Capita Income

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As the world grows to become a richer place, people are making different amounts of money. Income per capita is based on many factors, which is why income differs majorly among different regions. The term income inequality is used to describe the extent to which an income is distributed in an uneven manner among a population, or simple put as the gap between the rich and everyone else (Income Inequality.). While many nations see income inequality as a major issue and others see it as a minor one, it is definitely still important in the modern world to address this pressing issue. The job market is a major cause of income inequality. The skills that people have have a great effect on the job market due to supply and demand. If there is a large supply of workers for a specific skill, but only a low demand, the wage for that job will be much lower than if there was a low supply of workers and a high demand for that skill (Leung).

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Education easily ties into this. The so-called technology-and-education argument explains how high levels of education and skills are the gateway to high wages (Baranoff). High quality education also allows for skills that keep peoples’ jobs from being taken easily by computers and machinery, and although this issue still does remain as an issue for skilled workers, unskilled workers are subject to worse outcomes (Leung). Another cause of the inequality is globalization and outsourcing in other nations. Due to the fact that countries such as the United States import many goods from other countries, there is less need for many U.S. industries that previously provided many jobs in producing these goods (Baranoff). Examining income inequality in the United States, the facts have gotten worse over the past 30 years. Lydia DePillis says that in 2016, the median upper-income family[held] 75 times the wealth of the median low-income family, and this 75x has gone up from 40x since 2007 alone and from 28x since 1989 (America’s Wealth Gap Is Bigger than Ever.). Meanwhile, Denmark is a country with a much smaller gap between the rich and the poor. Another way of saying this is that they have a smaller gini coefficient, that being 0.249 in 2016. Derek Thompson explains how there is a lot of intergenerational mobility in northern Europe and Scandinavia, where a poor young child…[can] become at least a middle-class adult.

In understanding why this is, people must first consider that Denmark is similar to the United States because children of poor parents who don’t go to college are also unlikely to attend college or earn a high wage. Denmark’s lower class citizens are able to move up the social ladder due to high transfers of money that come from taxes paid by the rich. This demonstrates their economic philosophy stating that the market is an unfortunate socioeconomic lottery system (Denmark Isn’t Magic). Governments can help fight income inequality by providing education and employment training for lower class families. By doing so, it would bring everyone up to at least a minimum standard, and be more effective in growing wealth (Amadeo). Microloans have been another method helping people globally. In Haiti, a company called Fonzoke is helping poor Haitians start their own local, sustainable business and become self-sufficient. Through their program, they have helped over 5,000 people, and a large percentage of them can now manage their lives without grants. Kiva is another program that is online, where people can crowdfund a small loan to a real entrepreneur who is working to grow their company on the other side of the world (Divine). The world has an economic issue that needs to be addressed. If countries want to develop further in the future, it will be important for them to work on internal stability by working to lessen income inequality as a whole.

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Per Capita Income. (2019, Jul 01). Retrieved October 1, 2022 , from

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