Banking services chronicle Published this article page no 22 Income differences reflect individual efforts The recent rise of startups highlight money as an incentive of knowledge. State redistributive policies could curb individual incentives reducing wealth generation in an economy.Income differences are accumulated by generations The economic inequalities are significant reflections of differences between their parents and previous generations. Whether it is the number of children expenditure on education health etc. varies even within people under the same income group.Historical differences Usually high income inequality regions or nations tend to have low intergenerational mobility. As these regions fail to offer adequate opportunities for socioeconomic mobility.Monetary Resource Constraints Economic inequalities lead to issues of informal economy presence of parallel economy (Black Money) tax evasions small tax base etc. limiting public finances and resources available for redistributive policies from state.Human Capital Constraints Higher inequality decreases human capital accumulation as well it leads to a vicious cycle of low income low productivity low taxes and low human capital.Wealth Redistribution Challenges How to redistribute wealth for best outcome is a challenge. Whether it should focus on disparities between top versus bottom or greater focus should be on the middle class to leverage the rise in economic activities for higher tax base is a difficult question to answer. Way Forward Open and fair competition is an essential ingredient for any reform to tackle inequalities and promote equal opportunities for longterm sustainability. It becomes even more significant when national security is linked to it. Therefore instead of using pressure we should promote a rewardbased approach to equalize outcomes and opportunities via.Improved information on inequalities and policy outcomes through highquality capture of information about inequality. It can help not just in sound policies but change perceptions which lead to a divided public opinion Banking services chronicle buy.
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