Income Inequality

Income
Inequality

Income inequality in the

Philippines is the extent to which
income, most commonly
measured by household or
individual, is distributed in the
Philippines in an uneven
manner. It is an important
indicator of equity in an
economy, and has implications

Income inequality is the

difference in how assets,
wealth, or income are
distributed among individuals
and/or populations. It is also
described as the gap between
rich and poor, income
inequality, wealth disparity,
wealth and income

SAMPLE PROBLEM
Income inequality has been a long lasting development challenge
for the Philippines. In a statement released by the national statistical
coordination board in 2005, it was recognized that the income gap
between the rich and the poor was wider in the Philippines than in
Indonesia and Thailand, indicating serious inequality in the
distribution of the countrys economic gains. It is noted that the
income of the Philippines' richest ten percent of the population was
in fact twenty times the income of the poorest ten percent.

Personal
factors

labor market

Education

Gender

Causes

Growth in
technology

LABOR MARKET
Wages are a function of the market price of skills required for a job
. In a free market, the market price of a skill is determined by
market demand and market supply. The market price of a skill, and
hence the wage for the job that requires the skill, is low if a large
number of workers (high supply) are willing and able to offer that
skill but only a few employers need it (low demand). On the
contrary, when there is low supply but high demand for a skill, the
wage for a job requiring the skill goes up.

EDUCATION
Individuals with different levels of education often
earn different wages. This is probably related to reason
one: the level of education is often proportional to the
level of skill. With a higher level of education, a person
often has more advanced skills that few workers are able
to offer, justifying a higher wage.

GROWTH IN TECHNOLOGY
Growth in technology arguably renders joblessness at all skill levels
. For unskilled workers, computers and machinery perform a lot of
tasks these workers used to be do. In many jobs, such as packaging
and manufacturing, machinery works even more effectively and
efficiently. Hence, jobs involving repetitive tasks have largely been
eliminated. Skilled workers are not immune to the nightmare of losing
jobs. The rapid development in artificial intelligence may ultimately
allow computers and robots to perform knowledge-based jobs.

GENDER
In many countries, there is a gender income gap in the labor market .For
example, in America, the median full-time salary for women is 77
percent of that of men. However, women who work part time make
more on average than men who work part-time. Additionally, among
people who never marry or have children, women make more than men.

It may be difficult to justify such differences. According to a U.S. Census

report, the wage gap is not fully explained even after accounting for key
factors that affect earnings, such as discrimination and the tendency of
women to consider factors other than pay when looking for work. The only
thing we know for sure is that gender does contribute to a difference in
wages in society and hence economic inequality.

PERSONAL FACTORS
It is generally believed that innate abilities play a part in
determining the wealth of an individual. Hence, individuals possessing
different sets of abilities may have different levels of wealth, leading to
economic inequality. For example, more determined individuals may
keep improving themselves and striving for better achievements,
which justifies a higher wage.
Another example is intelligence. A lot of people believe that smarter
people tend to have higher income and hence more wealth.

Environm
ent

Crime

Effects

Poverty

Social,
Cultural and
Civic
Participation

CRIME
Crime ratehas also been shown to be correlated with
inequality in society. Most studies looking into the
relationship have concentrated onhomicides since
homicides are almost identically defined across all nations
and jurisdictions. There have been over fifty studies
showing tendencies for violence to be more common in
societies where income differences are larger.

POVERTY
Oxfam asserts that worsening inequality is impeding the fight
against global poverty. A 2013 report from the group stated that
the $240 billion added to the fortunes of the world's richest
billionaires in 2012 was enough to end extreme poverty four
times over. Oxfam executive director jeremy hobbs said that "we
can no longer pretend that the creation of wealth for a few will
inevitably benefit the many too often the reverse is true."

ENVIRONMENT
The smaller the economic inequality, the more waste and
pollution is created, resulting in many cases, in more environmental
degradation. This can be explained by the fact that as the poor
people in the society become more wealthy, it increases their
yearly carbon emissions. It should be noted here however that in
certain cases, with great economic inequality, there is nonetheless
not more waste and pollution created as the waste/pollution is
cleaned up better afterwards (water treatment, filtering, ...)

SOCIAL, CULTURAL AND CIVIC

PARTICIPATION
Higher income inequality led to less of all forms of
social, cultural, and civic participation among the less
wealthy. When inequality is higher the poor do not shift
to less expensive forms of participation.

SOLUTIONS OF THE GOVERNMENT

Introduce minimum wages and move towards a living wage for all
workers
Government has been strongly encouraging domestic industries
and the manufacturing sector as a whole, although publicprivate partnerships arguably remain sluggish
Improve college-prep classes and college counseling for students
Use tax revenue to improve public infrastructure

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PREPARED BY:

MARVE KATRINA GAMBOA

CAMILLE PLATIGUE
CABARLES