what are two ways that income ought to be distributed? EXAMPLE 14 - 2 Are We Run
ID: 1096815 • Letter: W
Question
what are two ways that income ought to be distributed?
EXAMPLE 14 - 2 Are We Running to Stay in Place? There are a lot of statistics to show that the typical working person in Canada has not experi- enced an increase in standard of living for the last 20 years. If we correct take-home wages for inflation, that is an accurate statement. Indeed, Statistics Canada has frequently shown that real wages have actually fallen since 1980. There are at least two problems with such state- ments, though. The first concerns total compensation. Compensation of workers does not consist solely of wages. Whereas in 1971, nonsalary benefits (Workers' Compensation, Employment Insurance, pension payments, and so on) amounted to 8.5 percent of wages, they now come to around 30 percent. Second, even if after-tax real wages have not increased, the typical Canadian household is at least 20 percent better off than in 1971. Why? Because more households have a second breadwinner. Furthermore, fewer babies are being born, and so expenses per household are lower. One other piece of data is telling: virtually every measure of consumption per capita is growing, year in and year out. Consequently, the majority of Canadians continue to experience increases in their standard of living as measured by their actual purchases of goods and services. For critical analysis: Why might an individual be most concerned about total compensation? what are two ways that income ought to be distributed? LO 14.2 Discuss the four main determinants of income differences and two ways that income should be distributed.Explanation / Answer
Income and its distribution have always been a central concern of economic theory and economic policy. Classical economists such as Adam Smith, Thomas Malthus and David Ricardo were mainly concerned with factor income distribution, that is, the distribution of income between the main factors of production, land, labour and capital.
Modern economists have also addressed this issue, but have been more concerned with the distribution of income across individuals and households. Important theoretical and policy concerns include the relationship between income inequality and economic growth.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.