The distribution of income throughout the entire history of the world has been unequal and remains so today. This situation is due to many circumstances, both objective and subjective.
To explain the reasons for this inequality, it is necessary, first of all, to understand what, in fact, are incomes. In the most common sense, income is a certain amount of money received by an entity for any period. Moreover, the forms of income can be different - salary, fee, rent, interest, profit, various transfer payments (benefits for social security, unemployment, benefits for large families , etc.).
Incomes of the population, parameters of their structure, level, degree of differentiation and sources of income are the most important indicators of the economic and social condition of society and decisively affect the distribution of national income. Since incomes act as the main source of satisfying needs, their consideration also presupposes a correlation of this concept with a broader and more capacious content - the standard of living of the population, and the problem of income distribution is one of the central in economic science.
It is important to understand what incomes are and what their structure is, what sources serve as the basis for their formation.
The concept of "income" is a complex economic category. This complexity is explained by the fact that it is extremely difficult to structure.
In science, under personal incomes it is customary to consider the means received by an individual that can be expressed in physical and monetary forms, and which serve to ensure a decent level of existence.
The concept of "income distribution" is objectively interconnected with the problem of social inequality, the source of which is precisely the inequality in their distribution.
One of the fundamental aspects of modern social policy, in almost any state, is the income policy implemented at the state level.
For individuals or households, incomes are classified as cash and in kind. The first of these is the amount of money that an individual receives to satisfy his life needs.
Income includes those received by the individual as the results of agricultural activity, cattle breeding, as well as various works and services that are produced and consumed in kind.
Cash income is the amount of money that an individual receives for a certain period of time and serves as a means of payment for items that ensure his personal consumption.
For an accurate understanding of the essence of income, they are classified and defined by concepts: nominal, disposable and real.
Nominal is all income, the value of which does not depend on the actions of the taxation system and the prevailing price level in the market.
Disposable is the same nominal income, only the sum of taxes and other mandatory payments deducted from it.
Real income is the sum of benefits that an individual can acquire for the amount of disposable income.
In practice, income distribution is based on various approaches and theories. One of them is the theory of marginal productivity, which is quite simple: the more a person produces, the higher the income that arises from him as a reward for the production.
However, the application of this approach is not always justified. This is because:
- Imperfect competition does not always adequately reflect the amount of labor spent on the production of a particular type of goods.
- Inequality in the distribution and redistribution of income is an objective factor in the development of society.
- In each society, the number of income-generating people is always less than those who become their owners, so the application of the principles of justice is extremely relative and limited.
Based on this, it is necessary to include redistribution mechanisms that reconfigure the flow of income in accordance with the priorities of society and its laws. Therefore, other mechanisms and varieties of the functioning of the distribution system arise. For example, the distribution of income between the various factors of production available, acquires the properties of a functional distribution that forms the corresponding income — rent, profit, and various types of wages. They are called so - factorial or primary. They form secondary ones - which arise as a result of the redistribution system - pensions, benefits and other various transfer payments.
All incomes are the most important condition for the harmonious development of society and ensuring social stability. The state should play a significant role in their formation and regulation, and its role within the framework of this function is constantly growing.