What is the importance of income distribution to us especially to our economy?

Answer 1

The distribution of income in a population is a measure of the concentration of income. That is, of the total population, what percentage receive immense incomes relative to what percentage receive little or no income, and the relative measures of those levels of income.

In the US, terms like "upper (income) class", "middle class", and "lower class" have identified three distinct levels of income. The income levels associated with each, and the relative sizes of each class changes continuously. In general, lower class refers to too little income for planning and saving; income for a month covers not much more, if all, the expenses for the month. Middle class income might allow savings of a few months income to several years' worth. Upper class might have savings in excess of several years of income, or much more.

Different political agendas see the classes as having different roles in the social structure. In one view, the upper class provides the capital for ventures and infrastructure, the middle class the skilled efforts and mercantile workforce that actually generate most of the wealth of the nation. The lower class provides relatively less wealth creation, but often much of the labor and, prior to modern agribusiness, much of the food of the nation.

Societies with very large lower classes and little mobility (the access people have to move to a higher income class) tend to be less stable, more prone to civil unrest. In the US, military service and public education, plus a reliance on character and aptitude over social status in hiring practices, has been markedly accessible, in the past.

Another social theory contends that the existence of the upper class is the reason for poverty, and removal of wealth from the upper and middle classes will enrich the lower class to place the entire society in the middle class.

Measuring and citing income distribution can be used in serious study of social dynamics, in evaluating and planning economic changes, trends, and impacts of changes, and in political rhetoric.

Sharply divided income distributions favor the few wealthy and powerful individuals, as they have few competitors and a large impact of the lower classes. Broadly distributed incomes, particularly large middle classes and modest lower class people, tend to generate more wealth for all, including the lower classes.