Income

Inequality

Income
Inequality
Income inequality in the
Philippines is the extent to
which income, most
commonly measured by
household or individual, is
distributed in the Philippines
in an uneven manner. It is
an important indicator of
equity in an economy, and
has implications for other
social outcomes such as
crime and social exclusion.
(Wikipedia.com, 2014)

Income inequality is the

difference in how assets,
wealth, or income are
distributed among individuals
and/or populations. It is also
described as the gap
between rich and poor,
income inequality, wealth
disparity, wealth and income
differences, or the wealth
gap. (OECD, 2015)

SAMPLE PROBLEM
Income inequality has been a long lasting development
challenge for the Philippines. In a statement released by
the national statistical coordination board in 2005, it was
recognized that the income gap between the rich and the
poor was wider in the Philippines than in Indonesia and
Thailand, indicating serious inequality in the distribution of
the countrys economic gains. It is noted that the income of
the Philippines' richest ten percent of the population was in
fact twenty times the income of the poorest ten percent.

Personal
factors
labor
market

Causes
Education

Gender

Growth in
technology

LABOR MARKET

The market price of a skill, and hence the

wage for the job that requires the skill, is low if a
large number of workers (high supply) are willing
and able to offer that skill but only a few
employers need it (low demand). On the
contrary, when there is low supply but high
demand for a skill, the wage for a job requiring
the skill goes up.

EDUCATION
Individuals with different levels of education
often earn different wages. This is probably related
to reason one: the level of education is often
proportional to the level of skill. With a higher level
of education, a person often has more advanced
skills that few workers are able to offer, justifying a
higher wage.

GROWTH IN TECHNOLOGY
Growth
in
technology
arguably
renders
joblessness at all skill levels. For unskilled workers,
computers and machinery perform a lot of tasks
these workers used to be do. Hence, jobs involving
repetitive tasks have largely been eliminated.
Skilled workers are not immune to the nightmare of
losing jobs. The rapid development in artificial
intelligence may ultimately allow computers and
robots to perform knowledge-based jobs.

GENDER
In many countries, there is
a gender income gap in the
labor market. For example,
in America, the median fulltime salary for women is 77
percent of that of men.
However, women who work part time make
more on average than men who work parttime. Additionally, among people who never
marry or have children, women make more
than men.

PERSONAL FACTORS
It is generally believed that innate abilities
play a part in determining the wealth of an
individual. Hence, individuals possessing
different sets of abilities may have different
levels of wealth, leading to economic
inequality. For example, more determined
individuals may keep improving themselves
and striving for better achievements, which
justifies a higher wage.

Environm
ent

Crime

Effects

Poverty

Social,
Cultural and
Civic
Participation

CRIME
Crime ratehas also been shown to be correlated
with inequality in society. Most studies looking into
the relationship have concentrated onhomicides
since homicides are almost identically defined
across all nations and jurisdictions. There have been
over fifty studies showing tendencies for violence to
be more common in societies where income
differences are larger.

POVERTY
Oxfam asserts that worsening inequality
is impeding the fight against global
poverty. A 2013 report from the group
stated that the $240 billion added to the
fortunes of the world's richest billionaires in
2012 was enough to end extreme poverty
four times over.

Oxfam executive director Jeremy Hobbs

said that "we can no longer pretend
that the creation of wealth for a few
will inevitably benefit the many too
often the reverse is true."

ENVIRONMENT
The smaller the economic inequality, the more
waste and pollution is created, resulting in many
cases, in more environmental degradation. It should
be noted here however that in certain cases, with
great economic inequality, there is nonetheless not
more waste and pollution created as the
waste/pollution is cleaned up better afterwards.

SOCIAL, CULTURAL AND CIVIC

PARTICIPATION
Higher income inequality led to less of
all forms of social, cultural, and civic
participation among the less wealthy.
When inequality is higher the poor do not
shift to less expensive forms of
participation.

SOLUTIONS OF THE GOVERNMENT

Introduce minimum wages and move towards
a living wage for all workers
Government has been strongly encouraging
domestic industries and the manufacturing
sector as a whole, although public-private
partnerships arguably remain sluggish
Improve college-prep classes and college
counseling for students
Use tax revenue to improve public
infrastructure

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PREPARED BY:

MARVE KATRINA GAMBOA

CAMILLE PLATIGUE
CABARLES