Essay about Welfare Economics - Essay Prowess

Essay about Welfare Economics

Essay about Welfare Economics

Welfare Economics

Welfare economics is basically a component of neo-classical micro-economics that aims to critically discern the characteristic outcomes, within the context of basic competitive equilibrium, that result in the final distribution of resources. It involves addressing the issue of social welfare towards informing public economics policy makers to nurture collective decision making through evaluating social developments in a country or region (Kline & Moretti, 2014). Social and economic objectives compete against each other whereby, the support for either is often cited as causing an adverse impact on the other. The U.S. is an immensely wealthy country from an economic perspective. Yet on the social front, it is known to boast great income inequalities such that very many of its citizens decry their quality of life below the poverty line (Kline & Moretti, 2014). The aim of this paper is to highlight reasons for the increased economic inequality with the U.S. economy despite registering modest growth.

While assessing the American society, it is evident that some persons bear more wealth than others (Kline & Moretti, 2014). Similarly, it appears that the rich are many in some parts while in other areas, the largest populations of inhabitants are poor. One wonders why this is the case and how may the situation varied a few decades ago in comparison to what is prevalent today. One can also note that the aspect of happiness seems not to emanate from an individual possessing numerous amounts of money.

Income inequality simply implies that there is a widening gap between persons with economic might and the persons who depend upon the former group for their sustenance. As the U.S. grows its economic portfolio, a high percentage of registered gains accrue to the owners of capital. These occur at the top part of the economic ladder (Kumhof, Rancière, & Winant, 2015). Conversely, for persons with a college education or more, the difference in earned wages is also indicative of the fact that top earners project the greatest divide in take home pay. Financial wealth distribution in the American economy is thus highly skewed despite the fact that has been an increase in the level of incomes per family in the past few years (Lansing, 2015). This implies that as opposed to the upper percentile of the economic ladder benefitting in a disproportionate manner, there seems to be a mitigating element that is ensuring that other groups on the ladder also register better quality of life. The transfer of payments away from the governments to a particular pool of individuals serves to ensure gains are attained by households existing outside the top income earners demography (Lansing, 2015). Gains in welfare for capital owners also tend to increase relative to their capacity for consumption. Conversely, for workers, their consumption tends to project loss in welfare. Over a period of time, it is possible to derive patterns for each of the two groups allowing a reflection in changes in welfare relative to income distribution. Redistribution of incomes by the government through taxation and host of welfare services is an attempt to attain fairness between the two groups (Munda, 2016). By collecting taxes from all income earners and offering social goods that benefit all such as expanding access to quality healthcare for all ensures that both groups are accorded equality relative to high social development.

These observations provide a basis for employing a quantitative research methodology towards assessing the presence of economic inequality in a nation that is realizing continued economic growth (Munda, 2016). One particular attribute of importance to the study is the owners of economic capital group. These represent the topmost income percentile amongst the country’s households. The other group is made up of workers who are in essence the remaining percentile group.

References

Kline, P., & Moretti, E. (2014). People, places, and public policy: Some simple welfare economics of local economic development programs. Annu. Rev. Econ.6(1), 629-662.

Kumhof, M., Rancière, R., & Winant, P. (2015). Inequality, leverage, and crises. American Economic Review105(3), 1217-45.

Lansing, K. J. (2015). Asset pricing with concentrated ownership of capital and distribution shocks. American Economic Journal: Macroeconomics7(4), 67-103.

Munda, G. (2016). Beyond welfare economics: some methodological issues. Journal of Economic Methodology23(2), 185-202.