The distribution of income

The distribution of income is defined as the distribution of wages earned across a company, industry or country. I will be focusing on the distribution of wages earned across a country.

There are both advantages and disadvantages of the equal distribution of income. If it was equalised and everyone earned the same amount, people would have less incentives to do more challenging but vital jobs (e.g. doctors) as they could get paid the same amount for doing an easier job (e.g. window cleaning). The graph shows the inequalities in the wage rate that would be removed but there would be a cost of implementing the more equal distribution of it. This would come from both people in the higher quintiles of wage rates shown in extract A. These are both major disadvantages showing that it may not be practical to implement equal distribution as they don’t outweigh the costs which would be public outcry, striking and many others.

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The advantages of implementing are that society would be more equal, making debts, mortgages etc easier to manage for banks as everyone has the same income. Also people are more likely to have a job as it would be the same as everyone else and far more worthwhile, as benefits would be far less. The inequality that would be removed is shown in Extract C which tells us how much the top 1% earns after taxes in comparison to the current average income which ranges from £24,000 to just over £30,000 depending on gender. This shows that it is better for the lower quintiles also shown in extract A as they would benefit from the equalisation of wage rates, this also means that the higher quintiles would lose their higher wage rates which would cause issues within society that would be part of the costs of implementing the scheme.

In conclusion I feel that, although the base idea is good, especially for those of lower incomes and wage rates, the costs – both social and economical (e.g. legally making everyone equal and striking) would be extremely high which I feel would be too high to pay.