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Discuss about literature review on income inequality?

This is done through:

• Reviewing, summarising and evaluating the literature on a topic of your choice from a broad list of topics provided by us

• Critiquing the methodologies and methods used in the topic literature

• Bringing together your findings to suggest new ideas such as models or gaps

• Suggesting areas for further research

• Suggesting implications for managerial or policy practice


1.0 Introduction

Stiglitz (2012) argued that literature review is one of the important part in terms of conducting research paper properly. In research paper, literature review part highlighted that living information of the selected topic. Therefore, Van Arnum and Naples (2013) cited that various norms and forms of research study is discuss through the literature review part by the researcher. Income inequality is one of the ways of measuring economics of one country in the world. High income inequality rate helps in developing the country. On the other hand, low income inequality rate decreases the economy as well as external earning for country (Walsh and Yu, 2012). In order to increase economy inequality within the region of one country, government has to play significant role through proper maintenance of taxes and wealth. Apart from that, skilled and knowledgeable worker within the region will also allow the government in increasing their income inequality (Ward, 2013). If the labor skill and knowledge in social market of the country is pro-poor and income taxes of the country is low then that particular country unable to maintain their income inequality (Ward, 2013).

Therefore, this particular study focused on the analyzing the income inequality of several countries throughout the world. Through the help of foundation, research tries to interrupt the concepts of income inequality regarding high as well as low.    

1.1 Income Inequality, Equality of Opportunity and Intergenerational Mobility

Review, summary and evaluation of selected research topic

In this article, researcher summarized the labor markets, public policies and families entire structure for extending the determination and opportunities of business (Corak, 2013). In this particular journal, researcher linked the earning of an adult with the background of family. The key them that described here was inequality, human capital of Americans, intergenerational mobility and presentation as well as evidence of earning growth of the country (Ravallion, 2014). Through this journal, researcher offered audiences a descriptive overview as well as structured system along with discussion regarding the drivers of opportunities that underlying in the human capital of a particular region. Based on the discussion, researcher generated the relationship between the intergenerational mobility and income inequality (Reardon and Bischoff, 2011). This particular journal finds out the different between the America and other countries in this world. Apart from that, with the help of Schlenker and Schmid (2015) theory and literature part, researcher analyzed the factor and describe the way of changing era of higher inequality via intergenerational mobility (Reeson, Measham and Hosking, 2012). Moreover, this journal concludes the different process for the top 1 percent. Furthermore, through this journal, explained the interaction between public policies, labor markets and families structure (Solt, 2009). Through the entire journals it has been identified that income inequality was measured with the help of household income that provided by the OECD (Pastor and Serrano, 2012). Apart from that, from here it has been identified that measurement of earning of an adult and paternal earning is possible through the intergenerational economic mobility. The estimated cost that found out in this journal for a 22 countries (Page and Jacobs, 2009). However, this was studied on order to correct the types of measurement error as well as deriving the permanent earning. In accordance to Rostila, Kölegård and Fritzell (2012), Great Gatsby Curve was the key framework that helped in comparing time and space of income inequality ad building casual relationship (Oishi, Kesebir and Diener, 2011). Moreover, theory of child development and mobility of economic was the key term that elaborates here. Therefore, through this journal, it has been also found out that adult outcomes of the children especially in the region of America reflect a series of gradients between the prevailing socioeconomic inequalities ad theory attainment at a specific points (Saunders, 2014).

Used methods and methodologies topic in literature

For this research study, analyst used several methodologies for analyzing the data such as research onion, descriptive research design, deductive research approach, random sampling, qualitative and quantitative data analysis, positivism research philosophy, etc. In order to analyze through a better way, research used deductive research approach (Ogus Binatli, 2012). It helped the researcher in making a hypothesis of gathered information.

Finding (Gaps)

The key findings of this journal were measuring of income inequality and the intergenerational mobility between the United State and other countries throughout the world. From this journal, it has been identified that income inequality is not only lowers than the intergeneration mobility but also intergenerational mobility also lower than the upward mobility of United State (O'Donnell et al., 2013). Income inequality low down the intergenerational mobility because the inequality has the shapes of opportunities. Between the individuals, several innate differences come consequently (Núñez and Tartakowsky, 2011). The effect of income inequality over mobility also has various affect such as it changed the incentives, form of institutional, opportunities, etc.

In this literature, researcher paid less attention to the consequence of intergenerational in terms of increasing income shares. The increase rate of income share was carefully documented by the analyst in this study (Noah, 2012).  The main gaps that identified in this study was top 1 percentage because it was different in terms of generating advantage. Apart from that, for this particular study was unable to implement as well as evaluate required investment of human capital and higher quality schooling (Nguyen, Fleming and Su, 2015). In the United State, similar dynamic seems unlike in terms of unfolding the each step of income inequality.

Suggestion (Future Research)

In order to increase result and make higher degree for this particular study, need to put considerable effort for linking the objectives with the background of nurturing families and college goers. Thus, able to increase the incentives and resources that intentionally promote the capabilities of children in United State.   

Suggested implications for managerial or policy practice

The key reason of selecting this topic was to elaborate the relationship between income inequalities, intergenerational mobility and the equality of opportunity. Through this journal researcher suggested the underlying trends and cross country comparisons that allows in low down or decreasing the intergenerational earning for next generation.


1.2 Income Inequality and Happiness

Review, summary and evaluation of selected research topic

This article concludes the happiness of people through analyzing the income inequalities. In the particular journal, it has been identified that people of America in the world are much happier rather than other countries regarding national incomes inequality (Oishi et al. 2011). Apart from that, through this journal, analyst demonstrated the inverse relation between the happiness and income inequality that explained general trust and fairness of the people. Therefore, it has been analyzed that Americans trusted people rather than other countries and perceived their fairness regarding the national income inequality in one year Milanovic (2013). However, it has been also analyzed that negative association between the happiness and income inequality holds for respondents of lower income. However, it never holed the respondents with higher income. The important method that identified in this study was that negative link between the happiness and income inequality of lower income respondents. However, the explanation was completed with the help of lack of trust and perceive unfair instead of lower household.  In accordance to Luebker (2014), income inequality and happiness is the psychological mechanism that create ink between the individual level of happiness and societal income economy. This study also tested as well as postulated two different types of psychological mechanism. As argue by López-Calva and Lustig (2010), it s possible that people can perceive fairness lower with greater income disparity in the year of lower income. Thus, people can get much happiness in that particular year. Apart from that, this journal concludes the two different mediating mechanisms such as individual happiness and disparity of income. However, it has been also found out that the income inequality affects disproportionately on the level of happiness. On the contrary, it has been seen that negative linking between the happiness and income inequality could reduces the low rate of income of the individuals in the years with the help of disparity of income.

Used methods and methodologies topic in literature

On the GSS, this journals measured the subjective with the help of three point of happiness. In order to collect information, researcher set some questions and selected 53043 respondents. In order to measured the percieed the levels of general trust and fairness, researcher also set the question that have three different options such as depends, take advantage and fair (Lin, Kim and Wu, 2013). However, the respondents had to provide the report of their household income. Taking the information, researcher converted the income rate into dollars. However, in order to analyze the income inequality and the happiness, researcher used household income that was long transformed. In the journal, researcher mentions the index of income inequality.  

In terms of nesting the respondents, researcher created the multi level random conflict model with the help of Mplus software version 4.2. This model significantly showed the direct effect on negative association between the happiness and income inequality (Liberati, 2013). Apart from that, researcher used the multi level mediation analysis in terms of testing the perceived fairness and general trust of the people regarding inverse association. After complete the equation of analyzing fairness and trust, researcher used multi level association between the disappeared of happiness and inequality of income

Finding (Gaps)

This journal mainly investigates the happiness and income inequality in the United State. It found out that, the people of America were average happy and more societal income inequality in years. Apart from that, it has been also seen that negative association also represented among the people of America with lower rate of income rather than the higher rate of income (Li and Guindon, 2013). In the year of research, the people of America were less happy with the income inequality.

The main limitations in this study were general trust, happiness, fairness, etc. Apart from that, researcher only analyzed the perceived fairness of the people. Researcher also emphasized the negative aspects of income inequality.  

Suggestion (Future Research)

As the people of America always happy in their income inequality, the further research will be developing based on national wealth distribution. Apart from that, the ultimate goal of the society makes happy the people of America. The further research will be based on fairness, general trust and income inequality.

Suggested implications for managerial or policy practice

In order to conduct this study, researcher properly maintained the methodological aspects as well as the governmental guideline. The income inequality and he happiness has been properly identified by the researcher in terms of accounting the mechanism for creating a link between the individual level of happiness and societal income inequality. Income inequality and happiness creates the sense of security for countries (Watson, 2009). On the other hand, income inequality and happiness of an country encourages the option of increasing income throughout the world.   

1.3 Current account imbalance and income inequality

Review, summary and evaluation of selected research topic

This journal demonstrated the econometric evidence in terms of showing the financial liberalization and income inequality (Kumhof et al. 2012). The key point that concludes by the researcher in this study was income inequality, current account imbalance and financial liberalization. LE GARREC (2011) depicted that evidence of econometric explained that higher financial liberalization and income inequality helps in setting up the variables of conventional explanatory. On the contrary, Gasparini and Lustig (2011) argued that set up variables of conventional explanatory through higher income inequality and financial liberalization helps in predicting the larger current account deficits significantly within the cross section of higher as well as advanced economies. Larrimore (2013) suggested that current account imbalances are the key or potential sources especially in the financial sector in order to run up into financial crisis throughout the world. On the other hand, Kenworthy (2010) cited that attribute crisis to the financial economies effects larger current account imbalances. As a result, the econometric rate low down according to the real world’s interest rate. In accordance to Keister, McCarthy and Finke (2012), due to the current deficits in United State there was lot of possibility for the dollars of United State and have danger for losing dollar’s status towards the revenue of currency in the world. This study displayed that unites of experiences in terms of most deficit countries regarding income inequality over the current decades in world economy.  Apart from that, this study also concludes the cause of liberalization and consequence of higher income inequality in the financial markets especially the domestic financial markets. Due to steeply increase income in the financial sector especially in the domestic financial liberalization, the inequality of income for United State increased.  Apart from that, this study also terminated that the government of United Kingdom actively increased their financial activity and facilitate the Mortgage financing for the middle and low income group in all part of the country (KANBUR and TUOMALA, 2013). Moreover, the researcher of this study empirically observed that the liberalization accounts for domestics financial are one of the substantial part of recent account deficits (Xue, 2012). In order to analyze the current financial liberalization and generate empirical result, researcher used the DSGE model (Dynamic Stochastic General Equilibrium). Through this model, researcher demonstrated the magnitude solution of econometric facts and evidence that affect large in the higher income inequality (KAKAMU and FUKUSHIGE, 2009). Moreover, it has been also described that financial liberalization is also associated empirically with the larger external deficits. The empirical literature on the distribution of wealth and income that focused on the explanation of long term changes in data especially in the income rate of country. 

Used methods and methodologies topic in literature

In order to calculate the gathered information, researcher used several aspects or methodologies in this study. In order to analyze the information in a better way, researcher divided the methodology part into four several part. In the first part, described the increment rate of global inequality with the help of various calculations. In this particular part, it has been identified that income inequality share more than 5% of income of the country in United Kingdom. Apart from that, top income also unable to start instead of global income inequality for the country (Jäntti and Jenkins, 2009). In the next part of this particular study, researcher used the methodology of calculating the global household indebtedness with the leading percentage of GDP. Researcher used the U-shape in order to calculate the rise of household indebted income percentage. U-shape methodology allowed the researcher in increasing most the rate of income inequality with the firm (Xueliang, 2010). Apart from that, researcher also used the L-shape methodology for calculation of lower level of income of the country’s household. In order to illustrate the phenomenon of the country including United State, United Kingdom, etc, researcher used data coverage sheet among the countries.  

Finding (Models or Gaps)

Economic model has been used in this particular study in terms of understanding the econometric result. The researcher of this study introduced the separate shocks for domestic financial liberalization and income inequality that significantly extent the vice versa and letter. It has been identified that in order to increase the income inequality and happiness, investors maximizes the function of lifetime utility (Joumard, Bloch and Pisu, 2013). Apart from that, workers also help in maximizing the function of lifetime utility.

Suggestion (Future Research)

This research study made the empirical case in terms of increasing income inequality for both cause and domestic financial liberalization with the use of advance economies. Furthermore, the stylized factor as well as evidence of cross-country econometric suggested that magnitude effect is larger from the viewpoint of income inequality and financial liberalization of united Kingdom.

Therefore, this study utilizes several policies for reducing the income inequality that involved in relatives taxes of workers. However, the main gaps of this study were to unfold the bargaining power over wages. Future research will be the driving factors that increase the capital income taxes and strengthening bargaining power over wages.  

Suggested implications for managerial or policy practice

This is an empirical study because theoretical analysis examines the emerging economies that have already rising income inequality in the recent surpluses instead of deficits. Moreover, this study also surpluses largely through explanation of increasing reason of inequality income for United Kingdom. With the help of DSGE model, researcher represented the driving financial crisis of the selected country.


1.4 Less income inequality and more growth

Review, summary and evaluation of selected research topic

Since past few years, the OECD (Organization for Economic Co-operation and Development) countries drifted the rate of income inequality (Hoeller et al. 2012). This journal represented that growth of income inequality has not been lifted all income in the same boats (Jenkins, 2009). Moreover, it has been also analyzed that top countries like United State, United Kingdom, Ireland, Canada, etc capture large share over the income and gains their income. The main discussion of this journal was the first review of nexus between the well being, growth and inequality. Moreover, this study also assessed the way of measuring inequality regarding changes when it moves from labor earning individually to the disposable income of household adjustment. Therefore, the researcher of this journal like Jauch and Watzka (2011), successfully taking the account of other market resources regarding income in order to explain the individual labor earning. Apart from that, the effect of formation of household disposable income on the income inequality and growth of countries also elaborated in this study (Zhang and Eriksson, 2010). Researcher analyzed the effect of transfer and taxes onto the more growth and income inequality in this particular study. After discussed the several affect on income inequality, researcher provided the summarized formation of country profile especially those countries that counted under the Organization for Economic Co-operation and Development (OECD) in order to demonstrate the various dimension of income inequality (Impact of Income and Income Inequality on Infant Health Outcomes in the United States, 2010). Researcher also used cluster analysis that identified the group of countries that share inequality pattern similarly.

Used methods and methodologies topic in literature

In this particular review, several things are identified that has great effect on more growth and income inequality. In this empirical and theoretical literature, estimation method has been used in terms of showing inequality on growth. Apart from the, estimation method also approximate the sample affect and data quality (Zhuang, 2010). In order to analyze the overall market income inequality, this article used several methodologies like market component in terms of showing the contribution of self-employment income that increase the market share of OECD. Moreover, from this articles it has been identified that researcher used two different disaggregation methods such as insurance value approach and actual consumption approach. Apart from that, data distribution method was also used in this particular article.    

Finding (Models or Gaps)

From this article, it is found out that majority of countries in the world differ widely regarding the income inequality of labor of working age individually (Im, 2014). The income inequality of labor is shaped based on the incentive rate, age rate and hours worked within a country. Moreover, it has been also found out that payment of taxes by the cash transfer and household helps the countries in reducing income depression. The main driver of market income inequality is individual labor income (Hyytinen and Toivanen, 2011). Furthermore, through the cluster analysis researcher demonstrated the pin down inequalities in market. High share of part time employment and wide wage dispersion is the driver of increase income inequalities from the point of view of labor earning. This article demonstrates the higher inequality and higher income growth of five large emerging countries such as China, India, South Africa, Brazil and Indonesia (Hoffmeister, 2009). Apart from that, this article assembled the country profile in diamonds. For each country with the OECD average, this diamonds allows in comparing 24 inequalities dimensions.

This study was unable to measure the main income inequality as well as their property like scale invariance, transfer principle, replication invariance, decomposability, etc. 

Suggestion (Future Research)

The future research based on the topic will be better measurement of income inequality and their properties that helps in understanding the coefficient variation of OECD countries.

Suggested implications for managerial or policy practice

This article was the review of nexus between the growth, income inequality and well-being. Therefore, this study properly analyzes the way or process of measurement of inequality that moves or changes from individual labor earning. This analysis properly adjusted the disposable income of household in the OECD countries. Apart from that, the selected article successfully takes the account of the income sources from other market.

1.5 Causes of changing income inequality

Review, summary and evaluation of selected research topic

This article summarized the statistic of the taxpayers on the occupation into the national distribution as well as the facilities thereof (Bakija, Cole and Heim, 2012). Apart from that, this article reviewed the pattern of growth of income inequality since 1979. Moreover, it concluded the top earner in occupation (Hasanov and Izraeli, 2010). The entire information the provided by the researcher on this particular article was based on the United State report on individual income tax returns. The information that demonstrated here is based on the individual income of managers, executives, financial professionals, supervisors, etc. According to Gasparini and Lustig (2011), in recent years the individuals income in U.S. was more than 60 percent that increase the 70 percent income growth nationally. The heterogeneity of growth rate regarding individual income of United State was described in this article. Apart from that, this article considered the implications of various competing explanation regarding substantial changes of income inequality that occurred in the nation of United State in recent years (Hao and Naiman, 2010). Moreover, researcher of this article also summarized the information on occupation. This information evaluated to control the income inequality in the nation of United State and influenced the other in terms of generating flexibility on income on the way of position of the income distribution, interaction with the occupation, business life cycle, house pricing, stock pricing, etc (Gustafsson and Sai, 2009). Moreover, this article also demonstrated the shifting of income across the year in terms of anticipation of changes of taxes that long terms affect on the return of investment. Moreover, this article estimated the significant elasticity of 0.7 percent among the taxpayers.

Used methods and methodologies topic in literature

The used methods for this article were panel of tax returns and repeated cross-section of tax returns. Through the repeated cross section researcher produced the merging file of statistic of income that are the division of internal revenue service (Gornick and Jäntii, 2013). According to the study of Bakija, Cole and Heim (2012), this article used random sample of tax return in order to draw an analysis report. Thus, researcher selected the probability of increase of income inequality. Moreover, this random sample of tax helped in generating the information of highest income returns regarding tax of the nation of United State (GASTON and RAJAGURU, 2009). Different supporting schedule such as income wage, interest, dividends, income, capital gains, etc are also collected as variables for this study. The gross income method was used for analyzing social security income of United State as well as the unemployment income along with state tax refunds. 

Finding (Models or Gaps)

The main approaches that identified in this article were the complete information on the occupation of the nation of United State and the found out the very high income people (García-Peñalosa and Orgiazzi, 2013).  Apart from that, the process of income of the top earners in different occupation that has potential effect on the growth of income inequality over time. Income of the executives, supervisors, financial professionals, managers is also identified in this article. Moreover, this study accounted that 60 percent share of income of the professional in United State increase the rate of income nationally and distributed highest percentile of the income (Földvári and van Leeuwen, 2013). In addition, from this article also identified the significant heterogeneity in occupation among the people and income growth across the nation. Moreover, significant heterogeneity in the income growth suggested the factors of changes and distributed the income in same way.

The main gaps of this study was not to provide the significant evidence that essential in any responsiveness of the people that belongs under the category of 0.1 percent. This article also demonstrated that estimation costs for th top of 0.1 percent was wrongly signed. Apart from that, statistical insignificant is also an reasonable gaps in this study.      

Suggestion (Future Research)

The suggestion regarding this article for future research should be more robust econometric modeling and emphasize better of the process of income dynamics.

Suggested implications for managerial or policy practice

In order to demonstrate the causes of changing income inequality, this article proceed the work into several section. In the literature review part, researcher analyze several study based in the reason of changes income inequality. Thus, evaluate the cause of changing income inequality and imply it for the taxable estimation of elasticity of income. Apart from that, result part outlined the incomes of high income taxpayers and tabulating occupation that represented the preliminary estimation of taxable income accounting for the high income earners.


1.6 Mirror of consumption inequality on income inequality

Review, summary and evaluation of selected research topic

Aguiar and Bils (2011) in their article introduced the issues that decrease the income inequality since last 30 years. Apart from that, the authors of this article translated the similarity that increases the consumption inequality. Through the several influential studies, the researcher discussed that consumption inequality was tracked the income inequality (FRANK, 2009). Through the Consumer Expenditure Survey, researcher of this article measured the inequality of consumption directly. Apart from that, this influential study built the Consumer Expenditure Survey in terms of keeping the pace of consumption inequality with the income inequality. With the help of Consumer Expenditure Survey, researcher concluded the evidence regarding the increase of inequality after tax (Florida and Mellander, 2014). Apart from that, in this article researcher illustrated the scenario of implies extreme shift in terms of increasing income inequality over consumption inequality. This article also measured the process of low versus high income of household that allocated in spending to luxuries versus the necessities.  

Used methods and methodologies topic in literature

For this particular research topic, several methodologies were designed by the researcher in order to measure the consumption inequality instead of focusing Crossly and Browning analysis (Emerson, 2009). The nondurable consumption method used in this part in terms of analyzing the interest that share by BPP in the cross-section of the consumption (Echevarría, 2014). Permanent versus transitory nature of the income inequality is also an methodology that used in this article for adjusting the measurement especially for the systematic measurement approach. Apart from that, researcher used the econometric methodology for correcting the several classes for mis-measurement (Dion and Birchfield, 2010). The econometric methodology also estimated the demand system that generates consumption inequality growth. Moreover, econometric methodology was used by the researcher in terms of sensing the expenditure elasticity about the consumption inequality that more informative. Stability of expenditure elasticity is also an effective methodology that used in this article for identifying the relative price that depend on other attributes of the goods (Dettrey and Campbell, 2013). This methodology also applied in terms of understanding and analyzing the relevant price of goods that change overtime.

Finding (Models or Gaps)

The article of Aguiar and Bils (2011) was not able to demonstrates the one income group as well as the estimate the relatives expenditure for the income group that remain same such as household, individual income, group income like supervisor, etc. The first stage of this report outlined the estimated costs of goods that change over time (Demuynck and Van de gaer, 2012). Apart from that, from this article, found out the total expenditure of elasticity of each good. Apart from that, average share of good out of total expenditure also identified from this article. The plot of relative expenditure for low income and high income household also analyzed in this research. Regression estimation of log change in the inequality of consumption also explained in this journal. Moreover, this particular research paper represented the increase rate of consumption inequality mirror on the income inequality that much greater (Crow, Zlatunich and Fulfrost, 2009). Apart from that, from this article identified that Engle curve approach that allows to use the total expenditure report of the different classes of goods that has systematic measurement error. Moreover, this study explored the validity and reliability of the assumption that found out in the robust result with alternative specifications. The interpretation of data or information that provides the explanation of inconsistency between the income inequality, expenditure inequality as well as the facts of household from the point of view of high income and low income.    

Suggestion (Future Research)

This article discussed entire related objective with a systematic approaches. However, the current study was unable to open the different classes of god that change overtime. Therefore, future study based on this research topic will be based on assumption on demand system in terms of specifying the details correctly. Moreover, the future study will be based on the expenditure elasticity that are stable across the periods.     

Suggested implications for managerial or policy practice

This study explored the reliability of consumption inequality that is the mirror of income inequality. The data or information was interpreted in terms of providing explanation of the inconsistency between the low level income and high level income of household. Therefore, the report substantially shifts in the expenditure towards low level income to luxuries relatives households.


1.7 About income inequality

Review, summary and evaluation of selected research topic

This study helps in understanding the details of income inequality of the countries in the world. This study elaborated that in United State income inequality is higher rather than the other countries throughout the world (Romero, 2014). This research mainly demonstrated the process of income inequality (Cowell, 2011). Apart from that, this research also depicted the similar trend. This article reviewed that share of pretax income and the high share of income of the household is the key reason of increasing income inequality in the nation of United State. At the very top of the distribution, the increase rate of income of the household was largely driven (Charpentier and Mussard, 2011). This article reviewed that during the time of increasing income of the household share from 90 to 99 percentiles the shared distribution slightly increased from 24 percentage to 29 percentage. Romero (2014) argued that income inequality is one of the effective and efficient method measurement as well as increased the inequality. However, it has been articulated that income inequality is the best way of measurement of the welfare of the people in one country. Berg (2010) suggested that income varies in each year. Therefore, low income violates the people in terms of saving their expectation especially in the future. This article also analyzed the harm of income inequality in terms of measurement.     

Used methods and methodologies topic in literature

In order to understand the income inequality, researcher of this particular article used several question and collect information based on the question from the open sources information such as journals, books, blogs, websites, library, etc (Charles-Coll, 2013). Using this methodology, researcher identified that income inequality is the right option of the measurement of actual income of the people in a nation (Blank, 2011). Apart from that, through the question, researcher shows the working process of income data (Bishop, 2010). Therefore, descriptive design and deductive research approach was used in order to analyze data for this research work n better way that provide concrete result about the income inequality (Biewen and Juhasz, 2012).   

Finding (Models or Gaps)

From this selected article, found out that income inequality is the better way of measuring actual welfare of the people (Bergh and Fink, 2008). It has been also identified that consumption inequality is also an tends of analysis actual income of the country but income inequality is the best way of measuring the actual income of an country (Berger, 2010). Throughout this article, it has been identified that income inequality received higher attention of the people among the members of general public in the world.

However, this study was able to demonstrate details about the income inequality but unable to provides all relevant information that justified that it is the best way to method of measurement of actual welfare income of an country.

Suggestion (Future Research)

The future research based on this topic will be effectiveness of income inequality over the consumption inequality in terms of increasing economy of a country. Therefore, researcher of that study has to use several questions that will relate to the topic.

Suggested implications for managerial or policy practice

This article demonstrates the growing demand of income inequality for measuring the country’s income especially the individual and group income of household. Through this article, researcher analyzed that widening income causes the several problems in the United State.

1.8 The rise and fall of income inequality in Latin America

Review, summary and evaluation of selected research topic

Latin America has the most prominent features with persistence and high Inequality is the pervasive and distinctive characteristics in every region (Gasparini and Lustig, 2011). Berg (2010) argued that econometric crises were the un-equalizing due to less protection of the runway and high inflation. Apart from that, it has been reviewed that crises regarding un-equalizing were compounded due to safety and insufficient of vulnerabilities (Bekkers, Francois and Manchin, 2012). The income distribution of Latin America is fully comparable inequality statistic as well as has the piece of evidence that suggested Latin America is the most unequal region in the world along with the Africa. In the world income inequality database, Latin America considers the 10 place. According to the report of World Bank, income share of Latin America was under the 20 percent and it equaled 2.9 percent of the total income. Distributions of the Latin America are mainly characterized by the income share that has high income rate and the categories of the relative region in this region (Bechtel, Lordan and Rao, 2012). According to the world income inequality, Latin America has the lower income shares rather than other countries. Apart from that, from this discussion it has been identified that Latin America have been highly uneven in accordance to the relative information of the  world. On the other hand, some of the critics argued that in Latin America levels of inequality were not too much high. Hoeller  et al. (2012) depicted that income inequality in the Latin America helps in increasing the consequent of income rate sharply. During the time of 2000, the income equality of Latin America has been declined.   

Used methods and methodologies topic in literature

In order to conduct this research study, researcher used various types of methodologies especially for analyzing the result of gathered information. The researcher in terms of analyzing the standard benefits has used non-parametric decomposition methods. Though this methods, researcher demonstrated the role of income inequality that is important in changing the distribution of labor income (Bastagli, Coady and Gupta, 2012). In order to decline the inequality, researcher implies several methods such as governmental transfer in accounting. In order to collect information, researcher used the non probability sampling methodology. It was used because, data were collected from the several sources such as distribution of income of Latin America (Barnes, 2012). Apart from that, researcher also displayed the limitations of data that were substantial in terms of increasing inequality. For analyzing gathered information, researcher for this particular articles used qualitative and quantitative data analysis tools. Researcher adopted the several policies of governments in order to restore growth and stability.  

Finding (Models or Gaps)

This article concluded the historical persistence of the income inequality of Latin America. It has been identified that society of Latin America are highly uneven from the point of view of rest of the world regarding income inequality (Atems and Jones, 2014). In the Latin America, economic stagnations and revolutions reduced the level of income inequality during the nineteenth century. Apart from that, this study also summarized that in the global economy Latin America increased their income i9nequalioty substantially during the end of nineteenth century. Therefore, the historical analysis based on fragmentary evidence and scarce, researcher found out several problems that relates to methodology (Arawatari, 2007). Based on micro data, modern analysis consolidates several national household surveys in the countries of Latin America. Therefore, through this study researcher provides the details picture and overview of the income inequality in Latin America. Moreover, through the analysis, researcher indicates that region of Latin America has small rise in their average of income inequality (An and Bosworth, 2013). In the last three decades, there are two different phase were present in the income inequality of Latin America. During the period of nineteenth century, the inequality in Latin America was associated with the market oriented reforms and macroeconomic crisis. Social safety nets as well as the weak labor institutions are also the context of the inequality in Latin America (Alesina, Michalopoulos and Papaioannou, 2012). This study displays that in 2000s, the growth of income inequality in Latin America has been declined. There were two main factors and phenomenon that declined the growth rate of income inequality in Latin America such as Increased of governmental transfer towards the poor and weak people and earning gap of the knowledgeable and skilled workers throughout the region. Due to wide set of factors such as improvement of macroeconomic conditions, fall in the earning gaps are occurred within the region of Latin America (Albrecht and Albrecht, 2009). Apart from that, due to the increase of fiscal situation, expansions are covered on the unequal zing effect on labor market. On the other hand, it has been also seen that due to undeniable progress, the income inequality rate is very much high in the region of Latin America. In spite of this, public policy in Latin America is so much poor and the governmental spending share is too much large that collection of wealth taxes and personal income is low according to the other developed country (Akita, Kurniawan and Miyata, 2011). From this review, it has been found out that this journal is able to analyze the methods that effect in high and low income inequality in Latin America, but unable to utilize how the methods are effect and how to mitigate the problems in terms of increasing income inequality in Latin America.

Suggestion (Future Research)

The future research based on the selected topic income inequality will be identification of paths towards more equitable societies that is crucial in terms of public spending that is more progressive (Aizenman and Yothin Jinjarak., 2012). Apart from that, based on this topic future research will be to identify the path where efforts are redoubles for improving the access of income inequality services.

Suggested implications for managerial or policy practice

This part concludes the deniable and undeniable progress regarding income inequality in the region of Latin America. This study shows the high as well as low income rate of income inequality in different part of Latin America (Abdelbaki, 2012). Due undeniable progress in the region of Latin America, income inequality rate is very much high rather than other country in the world. On the other hand, increase rate of governmental taxes within the region is too much low as well as transfer rate of Latin America is still remain low for this region, These are the reasons of low income inequality in Latin America (Abdullah, Doucouliagos and Manning, 2013). Apart from that public policy of Latin America, is pro-poor and the spending share of Latin America government is natural. Moreover, tax and wealth income is also relatively low for Latin America. Therefore, it has been suggested that in order to increase the income inequality and maintain it, Latin America government has to make the more progressive policy and effort that will be crucial for accessing quality service (Aguiar and Bils, 2011).


Thus, to conclude, it can be said that the researcher have summarized several methods and techniques that relate to income inequality. This part analyzed several articles that describes the effectiveness of income inequality, the cause of high and low income inequality in each region. Through discussion, researcher analyzed that income inequality is one of the most prominent method of measuring capital or earning of a particular region throughout the world. This current study thus makes an empirical case that describes the increase and decrease of income inequality from two separate perspectives such as domestic financial liberalizations cause and consequence. Apart from that, the study also displayed that advance economies plays the leading role on increasing the current account fields of the government in a particular region. Several facts and econometric evidence have been analyzed in this part in order to support or identify the income inequality and its effectiveness. In order to conduct the study based on income inequality and support the information, researcher used several articles that relates with the income inequality with the help of using income inequality of different country such as United Kingdom, United State, Mexico, Latin America, etc. In order to explain the transmission mechanism towards the foreign indebtedness and higher domestic along with higher income inequality, this part demonstrated that majority of authors of articles used DSGE model. This model helps in analyzing the key consistence of two groups such as small group that become very rich and households. Furthermore, for better understanding about the income inequality that measures the econometric situation in different part DSGE model provided the factors of inc5easing as well as decreasing the income inequality. Income share of the worker and their skilled as well as effective policy regarding taxes of the government of respected region is one of the key factors of increasing income inequality. Poor tax rate and unskilled labor market share is the aspect of decreasing income inequality for each countries. For greater inequality domestic financial liberalizations is the best policy response. Higher debt service, higher household debt and the low consumption rate maintain the growth rate or increase of income inequality. Moreover, global imbalance can influences the financial market imperfections for short sighted response. This liberalization leads in addressing the underlying income inequalities that results in a globalize way rather than the increase of regional.

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