Sample Economics Essays on Income Inequality

Income inequality has been at the center of America’s economic debate. In his campaign, President Donald Trump hinted at implementing various initiatives such as imposing high taxes on the rich to restore the yesterday’s middle-class jobs in the economy’s manufacturing sector. The rising gap between the rich and the poor across the U.S. has fueled unrest amongst the Americans. Income inequality is an acceptable and unavoidable component of a productive economy. Thus, the U.S. government should not intervene in this issue as it is unavoidable.

Many people believe that income inequality has led to various social externalities such as higher crime rate, and poor health. What they do not know is that these social externalities are a result of the repercussions of poverty and they are not impacted by income inequality. Therefore, the role of the U.S government is to focus on equally distributing resources to help the poor rather than to attempt narrowing the income inequalities (Agarwal and Holmes Jr 450). In the past, the U.S. government has attempted to implement a more comprehensive tax system, and redistribute wealth from the rich to the poor to reduce the increasing gaps between various households especially the rich and the poor. These initiatives have proved to be more harmful rather than beneficial to Americans. The main objective should be to make the poorer rich and not to make the richer poor (Hubbard and O’Brien 464). Therefore, the role of the government should be to improve social programs and especially public education to ensure the rising gap between the poor and the rich is reduced or eliminated. Education certainly will give the poor an opportunity to work hard, and bring a change back to their households. Poverty rate across the U.S stands at 12 percent despite the misleading statics that show that it is at 22 percent (Agarwal and Holmes Jr 456). The current statistics show that most Americans have improved their financial situations, and as such, the U.S government should not intervene in the issue of income inequality. Despite the real wages appearing stagnant across the country, most Americans have improved their financial situations by utilizing the technology platforms especially social media sites such as YouTube to earn a living.

It is disappointing to hear that many relate income inequality to poverty. Everyone needs to understand the distinction between income inequality and poverty. Inequality is when some people have more than others, while poverty is when people do not have very much (Fisher and Smeeding 33). An example of an unequal society is where some earn millions and others tens of thousands. However, as long as many people have tens of thousands, there will be less poverty in that society than in a society where people do not earn any income.

The U.S. government has been at the forefront attempting to lessen inequality and potential poverty across the country over the past decades. Other institutions such as the International Monetary Fund (IMF) and World-Bank have been engaged in addressing the need for reducing inequality and poverty across the U.S. and other countries. These institutions have supported many countries in poverty reduction and social protection programs to educate them on how to reduce inequality and eliminate or reduce poverty.

Economic growth is an important instrument in every economy as it improves living standards, and reduce poverty rates as well. Inequality in a country certainly hurts economic growth, and as such, it is not good for a social welfare system because middle and low-income earners will be interested in saving and investments to ensure that they have a better future in the long run.



Works Cited

Agarwal, Rajshree, and R. Michael Holmes Jr. “Let’s Not Focus on Income Inequality.” Academy of Management Review 44.2, 2019: 450-460,

Fisher, Jonathan, and Timothy M. Smeeding. “Income Inequality.” Pathways: A Magazine on Poverty, Inequality, and Social Policy, 2016: 32-38,

Hubbard, R Glenn, and Anthony Patrick O’Brien. “Public Choice, Taxes, and the Distribution of Income.” Economics, 6th ed., Pearson Education, 2017.