One of the biggest challenges for developing countries is income inequality. The larger its scale, the more people in the country begin to feel a sense of injustice. Lack of money leads to constant concern for the next day, and this is fraught with various extremes.
In the twentieth century, economists found a way to measure a sense of justice in relation to income distribution using various statistical methods. The Gini Index is one such indicator. This indicator appeared in the economy back in 1912 thanks to the Italian demographer and statistics by Corrado Gini.
The Ginny coefficient allows you to calculate the inequality of income distribution in the country. Its values range from 0 to 1. The smaller the Gini index takes, the more evenly income is distributed in the state. Conversely, if this indicator tends to unity, then most of the income is concentrated in the hands of a small part of the population.
Gini coefficient. Payment
The calculation of this indicator is carried out using the diagram of the Lorentz curve. Denote the area bounded by the Lorentz curve and the line of perfection as A, and the area below as B. Then the Gini index will be equal to the quotient obtained from dividing A by (A + B). Since A + B = 0.5, our indicator can be calculated as follows: D = 2 * A = 1-2 * B. If we express the Lorentz relation as a function of Y = L (X), then the quantity B can be found using the integral.
The general situation in the world looks like this:
The Gini index in those countries that are part of the European bloc, such as Slovenia, Denmark, Norway, Sweden, the Czech Republic, ranges from 0.2 to 0.3. This does not mean that the incomes of all the inhabitants of these countries are on the same level, but rather the fact that national wealth is distributed evenly. In each country, there are upper, lower and middle layers of society with their own specific forms of property and income, but there are no clearly poor and obviously rich people.
In countries whose economies are well developed, such as Japan, the UK, Germany, Spain, France and Portugal, the Gini coefficient averages around 0.35. The main sources of accumulation of funds are enterprises and organizations operating in the banking and manufacturing sectors. In society, two main groups of the population can be distinguished: the more affluent and the one that is more prone to economic shocks and financial crises.
Countries with a high Gini index (from 0.45 to 0.55 and sometimes exceeding 0.6) include Russia, the USA, Venezuela, Brazil, Guatemala, Namibia, El Salvador, Bolivia, Haiti and Zimbabwe. It would seem, how can such large countries as the USA and Russia be on the same list as African and Latin American states? Most likely, the answer lies in the methods of eradicating inequality, which each state implements in its own way and obtains corresponding results.
One of the ways to increase the uniformity of income distribution is considered to be the provision by the state of support for education, social security and health systems. This provides an opportunity for people with low incomes to get an education, stay healthy and be more confident about their future.
The next method of combating inequality involves changes in the taxation system of citizens, in particular, the introduction of progressive income tax rates. A fixed income tax rate , which, for example, exists in Russia, leads to the fact that the poor become even poorer and the rich continue to increase their wealth.
Of course, you can use a combined approach, however, new, fundamentally different ways to improve the distribution of income to the world economy are still unknown.