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The Upside of Income Equality


Posted on Aug 2017



 Income inequality is one the biggest challenge faced by different countries around the globe, such as China, India and the U.S. In the U.S, income inequality has been on the rise, especially among the highly educated and lowly educated members of the society. The article ‘The Upside of Income Equality' by Becker and Murphy indicates that income inequality is an indication that investment in human capital is getting higher returns in the labor market than it was the case some decades ago. The article tries to indicate that income inequality is rising due to higher education producing higher returns. The article tries to demonstrate how higher returns for the development of human capital are desirable and beneficial to the society. “We believe that the rise in returns on investments in human capital is ben­eficial and desirable, and policies designed to deal with inequality must take account of its cause (Becker and Murphy, 2007).”

 One of the arguments made by the authors in this article is that investing in human capital development is having more positive returns nowadays than it was the case in the past. The authors support the argument, by providing statistical data demonstrating an increased income for those with higher education that it was the case in the 1980s (Becker and Murphy, 2007). I agree with the authors that higher education is paying more today. Those with a college education today earn more than those with high school education, and this is the main reason why income gap is rising in the American society.

Another argument made by the authors is that income inequality can be addressed by implementing policies that address the issue of human capital development returns. I agree with the authors that while trying to address income inequality, the economic policies employed should not hurt the returns realized from making an investment in higher education is key in the development of skills needed to advance economic development in the society. In conclusion, this article provides some critical arguments that can guide the policy on addressing income inequality in the American society in the future.