Globalization has caused the widening of income gap in several
countries such as Singapore and United States (OECD, 2011), and some of the
solutions to reduce this gap are through education and redistribution of
incomes. As the world is becoming more
interconnected due to international trades (BBC, 2013), globalization has
impacted several countries positively in terms of its economic growth (Kohut
& Wike, 2008). However, globalization does not benefit every country the
same way. In this essay, the problem of widening of income gap will be discussed
and the effectiveness of two solutions to reduce the gap will be examined.
The increase in income inequality may have huge impacts on a country’s
social stability and cohesiveness (Chan, 2012). Income gap is often caused by the
concentration of income for the people who are rich (Hoeller, as cited in OECD, 2012). While the rich get
richer, the poor are unable to progress due to the lack of education and the
high standards of living. Hence, the widening of income gap poses a great
challenge for several countries and governments.
One solution to bridge the income gap is to focus on the educational
aspect. It was found that policies that promote equality in education reduce
the income gap as it decreases income dispersion, and equal distribution of
education opportunities also resulted in a more equal distribution of income (OECD,
2012). With education, people have the chance to acquire higher qualifications
and secure a high-paying job. Hence, to effectively reduce income gap,
countries can provide early childhood education and basic school for children
to start receiving education from young (OECD, 2012). However, even though this
solution is effective and sustainable, it takes years to see the effects. For
instance, children in England have to be in schools till the age of 17 (Department
of Education, 2013) before they enter the workforce. Instead of focusing on young
children, the governments should focus on children at-risk of dropping out of
school and encourage them to stay in school. This is especially crucial for
children from low-income families, as it was found that they have a higher risk
of dropping out, as compared to children from better income families (Wal,
1999). In addition, the governments can also encourage working adults to remain
employable through upgrading and trainings (Ministry of Manpower, 2013), so that
they can enjoy upward mobility. Therefore, with education and qualifications,
the income gap will be reduced.
Another possible solution to reduce the income gap would be the
redistribution of income, where people from the higher income contribute more to
help the poor and support their living (Stiglitz, 2013). This can be done
through tax paying, whereby people from the upper and middle class pay more tax
to support the lower class (Fischl, 2013). By doing so, the lower income group
will be able to keep more of their incomes at the end of the day (SparkNotes,
2013). However, this solution has its limitations as people from the middle
income might be over-burdened and may find it hard to cope (Chan, 2012). In
addition, as the salary of the lower income continues to be stagnant, the poor
are unable to move up the socio-economic ladder (Chan, 2012). Hence, to further
improve on this solution, countries can consider adopting Singapore’s means
testing systems in hospitals, whereby it is used to determine who qualifies for
more benefits and ensure that resources are fairly distributed to the
lower-income group (Phua, 2008). This policy helps to protect the interest of
the lower income group and it is helpful towards the middle income. Therefore,
redistribution of income can be effective in terms of means-testing as the poor
receives more help.
In conclusion, globalization has resulted in the widening of income gap
within countries such as Singapore and the United States. Even though there are
several solutions to curb this problem, not all solutions are suitable,
effective and sustainable in the long run. It is crucial for governments to pay
attention to the poor and not focus solely on economic development. Therefore, governments
are encouraged to put emphasis on education and be actively involved through
policy making to ensure that the poor will not be disadvantaged.
References
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Chan, R.
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Income Inequality in America: What We Should Be Doing About It. Retrieved from http://www.policymic.com/debates/26805/income-inequality-in-america-what-we-should-be-doing-about-it
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