Cultural level of development. Characteristics of the sociocultural development of children

INCOME INEQUALITY

INCOME INEQUALITY

(inequality of income) Differences in income between individuals or families, or between various groups population, between regions or countries. Inequality between individuals is due to differences in the ability to earn and the size of their property. Economically inactive persons - due to age, bad health or inability to find a job - usually have low incomes, even after taking into account social security payments, and those who are able to work have very low incomes. different abilities to earn income. Property is also unevenly distributed: inequalities in earned income and property income are closely related; in addition, there is a tendency to marry with high incomes. This means that families or households also show great income inequality. The degree of inequality can be measured either by taking into account direct taxes and payments from the system social insurance or not; in the first case, it tends to decrease, but it is still very far from the elimination of income inequality. Statistical measures of inequality include the Gini coefficient. Similarly, the difference in regional and national income is determined by differences in the ability to earn and the amount of accumulated capital in the country.

Economy. Dictionary. - M.: "INFRA-M", Publishing house "Ves Mir". J. Black. General editorial staff: Doctor of Economics Osadchaya I.M.. 2000 .

Economic dictionary. 2000 .

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Books

• Distribution and inequality in the global market economy, I. N. Myslyaeva. The presented work is devoted to the analysis of the processes taking shape in the field of income distribution in the modern market economy. Special attention focused on fundamentals...
• Problem innovation. Risks for humanity. Economic, social and ethical aspects, Varshavsky A.E.. Keywords Keywords: interdisciplinary, research, problematic innovations, new knowledge, globalization, market liberalization, income inequality, consumption stratification, invisible hand…

Introduction 3

1. Income inequality: essence, causes, dimension 4

1.1 The concept and causes of income inequality 4

1.2 Measures of income inequality 9

1.3 Differentiation of incomes of the population 10

2. Poverty: essence, causes, measurements 15

2.1 The concept and causes of poverty 15

2.2 Measuring poverty 18

3. Income maintenance system 22

3.1 State mechanism for the redistribution of income 22

3.2 Social protection as an income equalization mechanism 28

Conclusion 31

References 34

Introduction

At present, many scholars and specialists admit that the shortcomings of the reform model implemented during the 1990s are not least manifested in the most serious problems with the establishment of the middle class in the country (in its incarnations characteristic of a developed market economy).

The solution of these problems, as well as the “overdue and overdue” correction of the reform course, could be helped by the involvement in the relevant scientific and economic studies of an approach consisting in considering the emerging Russian middle class as the most important subject of the “shadow” economy, the hypertrophied development of which is another negative result. the course of market reforms chosen in 1992.

This approach seems to be extremely relevant today, when the country is again faced with the "fateful" question of choosing an economic strategy.

The purpose of this course work is to consider the problem of income inequality and the nature of poverty.

To achieve this goal in the course work solved a number of tasks:

consider the nature and extent of income inequality;

Consider the concept of poverty;

consider methods of income regulation.

The object is the formation of income and expenses, the reasons for their inequality among various social strata of the population.

The subject is the inequality of income and expenditure.

1. Income inequality: essence, causes, measurement

1.1 The concept and causes of income inequality

Economic growth in Russia does not help to fight poverty and does not contribute to reducing the gap between the incomes of the poor and the rich. This conclusion was made in the report of the Institute of Socio-Economic Problems of the Population of the Russian Academy of Sciences, dedicated to the problem of poverty in Russia.

Scientists note that the difference between the incomes of the richest and the poorest is almost the same in all regions of Russia, despite the fact that these regions themselves face various social problems and the economic situation in them is different.

At the same time, scientists pay special attention to the fact that the “gap” between the poor and the rich, as reforms are carried out, does not decrease, but increases: if in 1991, according to the State Statistics Committee, it reached 4.5 times, then by now, according to expert estimates, increased up to 14-15 times. 1

The causes of inequality in the distribution of income are related to the market system itself. The market system is an impassive mechanism; it does not conform to moral norms. Therefore, the main cause of income inequality lies in the private nature of the economy with the ruthless laws of competition. 2 In addition, the following causes of income inequality can be identified:

Objective reasons - reflect the overall usefulness of classes, territory, sectoral and interprofessional differentiation of wages, the level of education, inequality of ownership.

Subjective reasons - related to the nature of the individual (luck, connections, risk, adventurism, discrimination, etc.).

Specific reasons - due to the current features of the market environment (low labor costs, unregulated regulatory framework, the possibility of appropriating large "shadow" incomes).

The incomes of the population vary enormously, "and these variations are weakly related to the level of gross regional product (GRP) per capita," the report says. 3

“About 30% of the population receive wages below the subsistence level,” said Alexei Shevyakov, director of the Institute for Socio-Economic Problems of Population of the Russian Academy of Sciences. 4

Economic growth in the country has a positive effect mainly on the incomes of the prosperous part of the population. And, contrary to the government's expectations, it does not lead to a real reduction in the number of poor and low-income citizens.

A paradoxical situation is emerging: neither the rate of poverty reduction nor the rate of growth in living standards are in any way statistically related to the rate of growth of the gross regional product (GRP).

And, unlike countries with developed economies, in Russia the growth of the payroll fund is also not evidence of an improvement in the socio-economic situation: after all, most of this growth is due to an increase in the salaries of top and middle managers, while the indexation of salaries of state employees is the poorest part of the Russian population - often lags behind the rate of price growth. 45% of the total increase in wages was due to the increase in wages of the top 10% of workers, and more than 60% - the increase in wages of the top 20% of workers. The contribution of the wage growth of the 20% of workers with the lowest wages to the total wage growth was less than 3%. 5

According to the leading expert of the Development Center Natalya Akindinova, in 2004 there was a serious gap between the incomes of the rich and the poor. The state periodically reduces the gap between the incomes of the poor and the rich by increasing social payments and salaries to state employees.

"We have high level income polarization through an undifferentiated economy. Incomes are concentrated in a limited range of industries, respectively, the growth of incomes in other industries is not going well,” said Natalia Akindinova. 6

Employees of the Institute of Socio-Economic Problems of Population of the Russian Academy of Sciences believe that polarization is most noticeable in the growth of income from property.

“According to our estimates, in 2003 income from property accounted for 28.5% of all cash income of the top 20% of the population and about 12% of GDP. The problem of unfair income inequality in the Russian regions lies in the fact that the regional elites provide themselves with incomes many times greater than both GRP per capita and the average per capita income of the population of the region. Moreover, the lower the level of productivity of the regional economy and, accordingly, the lower the standard of living of the population of the region on average, the stronger such contrasts,” the report says. 7

Different results of economic activity, differences in the level of wages, in the return on human capital for men and women lay the economic foundations of modern gender inequality. But besides this, other social and demographic factors also influence gender inequality. Low wages for women are often not seen as a serious problem, as it is assumed that most women have access to other sources of resources through their spouses, other members of their families, and thus can work for low wages. wages without being among the poor. Economic inequality in income can, of course, be smoothed out due to intra-family redistribution, or it can even increase. There may also be sources of income other than wages, inequalities in access to which will influence gender inequality.

The gender structure of the Russian population differs most strongly in older ages. High mortality and low life expectancy for men have led to the fact that there are almost 2.2 times more women older than working age than men older than working age. Or, if we compare comparable age groups over 60, there are almost 1.9 times more women than men. Thus, two-thirds of pensioners are women. Moreover, in the oldest age groups, over 75 years old, this dominance is even stronger - 3-4 times 8 .

Poverty of single older pensioners is also characterized by extreme forms of its manifestation, since, having no other transfers except pensions, having lost the physical ability to earn money and maintain a personal subsidiary plot, they find themselves among the most needy groups of the population.

Incomplete families have fewer economic opportunities, taking into account the dependent burden. And although the number of children in a family is on average higher in complete families, compared with single-parent families, which are overwhelmingly one-child, but given that in half of complete families there is one child for two parents, the dependency burden in single-parent families contributes more to falling into poor groups of the population.

High divorce rates, an increase in the number of illegitimate children, an increase in widowhood due to high male mortality, a decrease in remarriages - all these factors increase the proportion of incomplete families 9 .

The analysis of poverty aspects is usually carried out on the basis of data from the State Statistics Committee or research databases such as RLMS. But specialists are well aware that such studies do not affect the extreme groups: the richest and the poorest. Without taking into account the poorest, the marginalized, the social bottom, the picture is displaced, which does not allow developing an adequate social policy.

Most of the homeless have secondary education, and there is a decrease in the proportion of homeless people with incomplete secondary education. This is due to the fact that in the 1990s the replenishment of the homeless occurred largely not only at the expense of former prisoners, but also at the expense of those who lost their homes as a result of real estate transactions. According to the professional and qualification composition, these are mainly workers (80%).

Sources of livelihood for the homeless: - 59% have casual and temporary earnings; - live on the money of friends and relatives 20%; - asking for alms 14%; - receive pensions and/or benefits 11%; - collect bottles 7%; - permanent job have only 4%. The most difficult situation is for people aged 50 and older: 11% had no income, 31% were forced to beg.

The low proportion of those with permanent jobs is explained by the fact that enterprises (in institutions, organizations) practically do not hire people who do not have registration at their place of residence, and those who have lost their housing and registration at their place of residence are fired. 20 Chapter 3 income population Republics ... the owner of one well). Advantages and disadvantages inequalities income population. No economic system...

Income differences per capita or per employed person is called income differentiation. Income inequality is common to all economic systems, but to varying degrees. IN traditional system there is the largest income gap. It gradually decreased with the transition to capitalism free competition and markedly decreased in the transition to a modern market system.

Significant rise in income inequality observed during the transition from the administrative-command to the market system. This is due to the fact that part of the population continues to live in the conditions of the decaying former system, and at the same time, a social stratum arises that operates according to the laws of a market economy. But over time, the size of inequality is reduced due to the involvement in market relations of ever larger sections of the population.

Inequality of income and wealth can reach enormous proportions and pose a threat to political and economic stability in the country. Therefore, almost all the developed countries of the world are constantly taking action to reduce such inequalities. But the development of these measures is possible only with the ability to accurately measure the degree of differentiation of income and wealth, as well as the results of the impact on it with the help of public policy.

people earn income as a result of creating own business(become entrepreneurs) or make available the factors of production they own (their labor, land or capital) for the use of other people or firms. And they use this property to obtain the right people good. In such a mechanism of income formation, the possibility of their inequality was initially laid down.

The reason for this is:

- different value human-owned factors of production (capital in the form of a computer is, in principle, capable of generating more income than capital in the form of a shovel);

- varying degrees of success the use of factors of production (for example, a worker in a firm that produces a scarce product may receive higher earnings than his counterpart of the same qualification working in a firm whose goods are sold with difficulty);

- different volume factors of production owned by people (the owner of two oil wells receives, other things being equal, more income than the owner of one well).

Building on this, you need to touch human capabilities to understand the causes of income inequality.

Firstly, from birth people are endowed various abilities both mental and physical. Other things being equal (this premise must always be borne in mind), a person endowed with exceptional physical force, is more likely to become a famous and highly paid athlete.

Secondly, differences in the ownership of property, especially inherited. People cannot choose in which family they are born - hereditary millionaires or ordinary workers. Therefore, one of the varieties of the income stream, i.e. income from property will vary significantly among the subjects we have named.

Third, differences in educational level. This reason itself largely depends on those mentioned above. A child born in a wealthy family is more likely to receive an excellent education and, accordingly, a profession that brings a high income than a child in a poor family with many children.

Fourth, even with equal opportunities and the same starting conditions for education, people who are sometimes called "workaholics" will receive more income. These people are ready for a lot, just to achieve high results in their work.

Fifth, there is such a group of reasons that is simply related to luck, chance, unexpected gain, etc. under conditions of uncertainty characteristic of a market economy, this group of causes can explain many cases of inequality in income distribution.

To quantify income differentiation different metrics are used. But in order to assess the level of inequality in society and develop an effective state policy, indicators of the factor distribution of income are not enough, because. the level of income concentration in certain groups of the population is not visible, i.e. we are talking about the personal distribution of personal income between families or individuals.

For this it is necessary divide the total number of families by income level into 5 groups equal in number of families. The first 20% of families include families with low incomes, the second 20% include families with higher incomes than in the first group, etc. Consequently, the fifth group will include 20% of families with the highest incomes in the country.

For graphic image personal distribution of national income is built Lorenz curve (Fig. 1.).

Rice.1 .

When plotting a curve the abscissa shows the percentages of families with the corresponding percentage of income, and the ordinate shows the percentages of incomes of the families under consideration. The theoretical possibility of a perfectly equal distribution of income is represented by the bisector, which indicates that any given percentage of families receive a corresponding percentage of income. This means that if 20, 40, 60% of families receive, respectively, 20, 40 and 60% of the total income, then the corresponding points will be located on the bisector.

The Lorenz curve is cumulative distribution of the population size and incomes corresponding to this size. As a result, it shows the ratio of the percentage of all income and the percentage of all their recipients. If incomes were distributed evenly, i.e. 10% of the recipients would have a tenth of the income, 50% - half, etc., then such a distribution would look like a line of uniform distribution (oe).

uneven distribution characterized by the Lorentz curve, i.e. the line of actual distribution (oabcde), which is further away from the straight line, the greater the differentiation. For example, the bottom 20% of the population received 5% of the total income, the bottom 40% received 15%, and so on. The area between the line of absolute equal distribution and the Lorenz curve indicates the degree of income inequality: the larger this area, the more degree income inequality. If the actual distribution of income were absolutely equal, then the Lorenz curve (oabcde) and the bisector (oe) would coincide.

To characterize distribution total income between population groups, the population income concentration index (Gini coefficient) is used, named after the Italian statistician and economist Corrado Gini (1884-1965).

The Gini coefficient is the ratio of the area of ​​\u200b\u200bthe figure bounded by the Lorentz curve to the area of ​​the triangle under the same curve, or

I Gini = S0abcde

The higher this ratio, the stronger the inequality, i.e. the higher the degree of polarization of society in terms of income, the closer the Gini coefficient is to 1. when incomes are equalized in society, this indicator tends to 0. It should be noted that this coefficient cannot be equal to either 1 or 0, because a civilized market economy excludes such extremes due to the purposeful redistribution of income.

Volume of income of each interval group is determined on the basis of the distribution curve of the population in terms of average per capita income by multiplying the middle of the income interval by the population in this interval.

Along with the Gini coefficient, to characterize the differentiation of incomes in society, the coefficient of funds or the decile coefficient of income differentiation is used, which shows how large the gap in incomes of the most distant groups of the population with the same share in total strength: 10% with the lowest incomes and 10% with the highest.

World practice shows that the income differentiation coefficient should not exceed the limiting critical ratio of 10:1, in Russia this ratio, which reflects only legal incomes taken into account by statistics, was 15:1 in 2006, i.e. 5 points higher than allowed. If shadow incomes are taken into account, this coefficient will be even higher.

Formation market system management and the formation of a layer of owners on this basis will inevitably increase the influence of the principle of distribution according to accumulated property. At the same time, the formation of the total income of the population will contribute to the growth of income differentiation and social stratification of society, the formation of a layer not only of the rich, but also of the poor, which will require active state intervention to overcome social tension.

The resolution of such an acute social problem like poverty, is one of the activities of the state and is associated with support at the level of at least a living wage for those who could not provide for themselves better life. Otherwise, the growth in the number of poor people is fraught with social explosions and instability in the life of society. Reducing the number of poor people is one of the main tasks of the social policy of the state in the countries of the market economy.

But practical implementation income equalization policy is associated with the expansion of complex problems. The state, taking responsibility for the social climate, sometimes faces extremely contradictory public perceptions of its actions. The fact is that for the successful implementation of socio-economic measures, considerable financial resources. Their sources are taxes. Hence the pattern: the higher the size of social benefits, the tougher the taxation should be.

This dependence was successfully formulated by L. Erhard: “The improvement in living standards that I seek is not so much a problem of distribution as of production, or rather productivity. The solution lies not in dividing, but in multiplying the national output. Those who devote their attention to the problems of distribution always end up in the mistaken desire to distribute more than they are able to produce. National economy"(L. Erhard. Welfare for everyone. M., 1991. - p. 205).

But a dynamic economy allows you to collect taxes at relatively preferential rates and at the same time receive enough large sums funds for social purposes. In modern Western countries the profitability of the economy as a whole is quite high, which allows the governments of these states to carry out effective social programs thus providing a favorable social situation conducive to dynamic development.

It should also be noted that differences in the level of consumption may also depend on factors that are not related to the internal properties of labor and its quality in the worker himself. First of all, such factors include: family size, the ratio of the number of employees and dependents in the family, health status, geographical and climatic conditions.

Fundamental objective function redistribution of the national income of the state is to reduce these differences and provide more favorable conditions for all members of society material life. The form of realization of this goal is the distribution of products and services, transfer payments, as well as government programs income stabilization.

Assistance program payments are designed to mitigate differences in income levels caused not by differences in labor, but by causes outside the labor process itself, and also to help satisfy a number of needs that are most important from the point of view of the tasks of shaping the ability to work, developing the individual, achieving a higher educational and cultural levels, affordable healthcare, pension provision. But since this form of distribution affects the interests of society as a whole and each of its members individually, then public policy in this area should be especially active.

Problems of inequality in income distribution And social politics states again became the subject of lively theoretical discussion in the late 70s and early 80s, during the neoconservative shift in state regulation("Reaganomics", "Thatcherism"). The essence of the problem is as follows: what are the limits of state intervention in redistribution processes?

Does efficiency decrease? functioning of the economy as a whole due to the growing scale of transfer payments - after all, taxes are the source? Are increasingly progressive tax rates undermining incentives to entrepreneurship? Don't social programs contribute to the growth of the layer of social dependents? The American economist P. Heine notes: indeed, people who own yachts are rich, people who rummage through garbage cans are poor.

But if new rules are adopted, according to which each owner of the yacht will be taxed with an annual tax of 10 thousand dollars into a special fund of "helpers", and if each of the "helpers" gets the right to receive an annual allowance of 2 thousand dollars from this fund, then most likely the following will happen : the number of owners of registered yachts will decrease, and the number of "helpers" will increase surprisingly quickly (Heine P. Economic way of thinking. M., 1991. - p. 379).

We must not forget that income inequality is largely generated by the objective operation of the market price mechanism. The desire to completely destroy the differentiation of income would mean the intention to completely destroy the market mechanism itself.

Thus, the social policy of the state in the market economy should be a very subtle tool, on the one hand, it is designed to promote social stability and alleviate social tensions, and on the other hand, in no way undermine the incentives for entrepreneurship of highly efficient wage labor.

The inequality of income distribution is inherent in the very essence of a market economy. Even in an ideally just society, it will exist, since we all differ in natural abilities. The inequality of income distribution is usually illustrated by a situation where a small part of the population has a significant share of the national wealth, and vice versa. To measure it, in particular, the Lorenz curve is used.

Wealth distribution

Every country has rich and poor citizens. The former possess the lion's share of national wealth, the latter barely make ends meet. In the short run, we observe inequality in the distribution of income. In the long term - the injustice of the accumulation of wealth by the elites.

The history of the formation of the concept

There are two ways to measure the inequality of income distribution - the Lorenz curve and the Gini coefficient. Both concepts were developed at the beginning of the 20th century and bear the names of their creators. In 1905, Max Otto Lorentz published an article in an American statistical collection in which he described his calculation method. Corrado Gini developed his coefficient already in 1914. But both works gained notoriety after the publication of Tony Atkinson's work on poverty and income inequality. Since that time, more and more economists have turned to original concepts and form their methods based on them.

Lorenz curve

Suppose we want to portray the injustice of the distribution of wealth in a state. To do this, we need the income of the population. The Lorenz curve is built in four stages:

1. Plot the percentage of total wealth on the y-axis, and the share of the population on the abscissa.
2. Divide the resulting graph into deciles. This allows us to answer the question of how much income the poorest and richest 10% of the population have.
3. Assume that we live in a perfectly just society. In this case, all groups of the population would have the same income. The Lorenz curve would look like a straight line that makes 45 degrees with the x-axis.
4. Compare our real schedule with the situation of an ideally just society.

The Lorenz curve allows you to visualize the inequality of income distribution. Several graphs can be combined to show changes over time or to compare the situation in a number of countries.

How to plot the Lorenz curve in practice

Suppose there are ten firms in the industry we are considering that differ in their contribution to the economy. If we had population incomes, the Lorenz curve would show the inequality of their distribution. In this case, it illustrates the fairness of market division. In order to construct the Lorenz curve, in this case it is necessary:

• Draw the abscissa and ordinate axes and name them correctly.
• Draw a line of absolute equality.
• Postpone the release of each of the firms.
• Analyze the resulting graph.
• Answer the question: "What provokes income inequality?" The Lorenz curve in this particular case shows the unfairness of the division of the market.

Gini coefficient

We considered the features of constructing a graph of income distribution. The Lorentz curve is responsible for the visual side of the question. The Gini coefficient operates numerical values. It is measured by the ratio of points on a real graph with an ideal case (a straight line that forms an angle of 45 degrees with the x-axis). The Gini coefficient can take values ​​from 0 to 1. In the first case, we are dealing with the absolute fairness of income distribution, in the second case, with complete inequality, when one person has all the national wealth, while others have nothing left. Naturally, both cases are unrealistic. However, it is important to understand that a lower value of the coefficient indicates a better situation in the economy of the state.

Problems of using the coefficient

The Gini index is based entirely on the gross national product and income statistics. Many developing countries do not provide accurate data, which makes it impossible to correctly assess the situation with the distribution of wealth in them. Also exists back proportional dependence between the Gini coefficient and gross domestic product per capita. This is due to the fact that in poorer countries the problems are more significant.

Interpretation of indicators

Now that we've figured out how to plot the Lorenz curve, it's important to understand what it actually means. How can countries with different levels of GDP be compared? The Lorenz curve and the Gini coefficient are used to understand how fairly the national wealth of the state is distributed. It must be understood that the countries with the lowest rates are not necessarily the richest countries. Similar gross products do not indicate the same shape of the curve on the income distribution graph.

Depth of poverty

Inequality in the distribution of income leads to the fact that 10% of the population come off to the fullest, and the bottom decile is forced to survive on $1.25 a day. Anyone who earns less than this amount is generally considered to be living below the poverty line. However, you need to understand that each country has its own price of life, so this standard must be adjusted according to national characteristics.

The Development Research Group of the World Bank calculates a special measure of the depth of poverty. For this, indicators of household income and consumption in 115 countries are used. Reports on the indicator are published twice a year: in April and September.

Social policy of the state

A high degree of uneven distribution of income is the cause of strikes and even revolutions. Therefore, the goal of any government is to make this phenomenon less visible and soften the gap between the rich and the poor. The social policy of the state is usually associated with the development of fair relations in society, the formation defense mechanisms and creating conditions for the growth of the welfare of the population. To do this, the government has to solve the following tasks:

• Prepare and implement employment programs.
• Provide assistance to socially vulnerable segments of the population.
• Ensure accessibility of cultural property.
• Develop and implement educational and medical programs.

conclusions

An ideal society of absolute justice does not exist. There are only states with a larger or smaller Gini coefficient. The smaller the gap between the ideal and real Lorentz curve, the better the distribution of income in the country. The problem of the unfairness of the accumulation of wealth by individuals or groups is characteristic of many modern states especially developing ones. A competent national social policy is needed to partially solve this problem. Its effectiveness is evaluated by comparing the level and quality of life in various countries or for certain period. It is important to prevent the achievement of the so-called social bottom and the progression of disproportionality. If the state copes with its functions, then the population, even the poor, should feel an improvement in the standard of living. And this is due not so much to a change in the shape of the Lorentz curve, but to the expansion of the consumer basket. Otherwise, a revolution with all its negative consequences begins to mature in society.

The distribution of income in a market economy is usually characterized by a significant degree of inequality. It is determined by three main factors.

First, the factors that were in broad sense inherited by the individual. These include not only inherited shares, cash deposits, real estate, etc., but also natural talent, abilities for certain occupations.

Secondly, the human capital accumulated throughout life. The most important factor in its formation is education.

Thirdly, luck: a person can suddenly get rich by investing in one corporation, and go broke by investing in another.

Let's consider these factors in more detail. There is a significant inequality of income between persons who own property, and therefore receive income from it, and persons who do not own it. It is property income that determines the position of households at the very top of the income pyramid. The right to inherit and the fact that wealth breeds wealth reinforces the role played by inequality of ownership in increasing income inequality. Differentiation of earnings is also explained by the ratio of supply and demand for a particular profession. If, for example, the salary of an engineer falls, then the demand for this type of labor decreases. But why do demand conditions differ in different labor markets? If all workers were homogeneous, all jobs were equally attractive to workers, and labor markets were perfectly competitive, then all workers would receive exactly the same wage rate. From this it is clear why in practice wage rates are different.

• 1. Workers are heterogeneous. They differ in abilities, as well as in levels of training and education, so they fall into professional groups that do not compete with each other.
• 2. Types of work differ in their attractiveness.
• 3. Labor markets are usually characterized by imperfect competition.

The heterogeneity of workers underlies the presence of non-competing groups. For example, a relatively small number of workers have the ability to be surgeons, violinists, research chemists, astronauts. Few have the financial means to receive the necessary training. As a result, the supply of these particular types of labor is very small in relation to the demand for them and, accordingly, their wages are high. These (and similar groups) do not compete with each other or with other skilled or unskilled workers: the violinist does not compete with the surgeon, the salesman does not compete with the violinist.

But a number of unskilled workers different professions may belong to the same group. For example, gas station workers, agricultural laborers, and unskilled construction workers may be classified in the same group, since each can do the work of the other. But none of the workers in this group will effectively compete with programmers, teachers of mathematics, who are in other, more limited groups.

Attractiveness of works - other important factor income differentiation. Almost everywhere construction workers receive higher wages than office clerks. Construction work involves heavy physical work in different weather conditions, the possibility of injury. Office workers are white-collar, pleasant environment, air conditioning, low risk of accidents and layoffs. As a result, construction contractors must pay higher wages than firms pay.

There are other factors that influence income inequality. Luck, chance, personal contacts - all this helps to get rich. On the other hand, many causes (prolonged illness, accident, death of the breadwinner, ethnic discrimination) can lead to poverty.

The quantitative measurement of the degree of inequality in the distribution of income between different groups of the population is carried out using the following indicators:

• 1) the Lorenz curve, named after the American economist and statistician Max Lorenz, which reflects the uneven distribution of the total income of society between different groups of the population,
• 2) the Gini coefficient (or income concentration index), named after the Italian economist and statistician Corrado Gini. It is determined by the ratio of the area of ​​the shaded figure on the graph of the Lorentz curve, formed by the line of absolute equality and the line of real distribution of income (0ABCDE), to the area of ​​the triangle 0EF. The Gini coefficient can vary from 0 to 1. Obviously, the greater the deviation of the Lorenz curve from the bisector, the greater the area of ​​the shaded figure and the greater the Gini coefficient.
• 3) decile coefficient, which expresses the ratio between the average incomes of the 10% of the most wealthy citizens and the average incomes of the 10% of the least wealthy. The recommended value of this coefficient is up to 5.

Income differentiation is largely related to the level of education. It should be taken into account that the distribution of the population into income groups reflects income differentiation by this moment, but for many people, incomes change over the course of their lives. While young people tend to have low incomes, by the age of 40-50 they move into higher income groups. In people with higher education incomes are, on average, more than twice as high as those of people who have just finished school.

In the economic literature, the term “investment in human capital” has become widespread. These are any expenses aimed at improving skills and abilities. Like the cost of equipment, the cost of education and training can be considered as an investment, since current expenses are carried out with the expectation that these costs will be repaid many times over.