What effect does the wide gap between rich and poor have in Latin American countries?

What effect does the wide gap between rich and poor have in Latin American countries?

What effect does the wide gap between the rich and the poor have in Latin American countries? The huge gap between the rich and poor caused a big divide in mega-cities whilst some were living glamorously in high rise condos right underneath them people were living in shacks.

How does the gap between rich and poor affect the economy?

Economic stability A number of economists have argued that inequality leads to economic instability. One mechanism by which this happens is that the rich consume a smaller proportion of their income than the poor. They save money which people on lower incomes would spend.

Why is there an income gap in Latin America?

Though many social policies have managed to reduce poverty and inequality, existing productive structures create a constraint because Latin American inequality is the result of an uneven personal distribution of labour income – the split among wage earners – rather than a functional distribution of income – the classic …

What are the causes of inequality between rich and poor countries?

Key factors

• unemployment or having a poor quality (i.e. low paid or precarious) job as this limits access to a decent income and cuts people off from social networks;
• low levels of education and skills because this limits people’s ability to access decent jobs to develop themselves and participate fully in society;

What is the gap between the rich and the poor in Latin America?

According to a study by the World Bank,the richest decile of the population of Latin America earn 48% of the total income, while the poorest 10% of the population earn only 1.6% of the income. In contrast, in developed countries, the top decile receives 29% of the total income, while the bottom decile earns 2.5%.

Why is poverty bad for the economy?

Child poverty reduces U.S. productivity and economic output by 1.3 percent of GDP each year, which costs the U.S. about $500 billion per year. This “reduced productive activity” generates a direct loss of goods and services to the U.S. economy.

How does poverty affect inequality?

They may lack access to safe work conditions, housing, education, health services, or clean water and basic sanitation. They may be unable participate in political life or vindicate their rights in court due to their poverty. They may also suffer unequal treatment or discrimination due to their status as poor people.

Why Latin American countries are poor?

The population has grown, and this is causing more poverty because the country’s cities are becoming over crowded. Over the last few years Peru is showing a little improvement with the social welfare system and the consumption poverty rates.

What is the relationship between poverty and inequality?

Poverty is related to, yet distinct from, inequality (Haughton & Khandker, 2009). Inequality is concerned with the full distribution of wellbeing; poverty is focused on the lower end of the distribution only – those who fall below a poverty line (McKay, 2002).

What is the difference between rich and poor?

Rich people have their money work hard for them. Poor people work hard for their money. Eventually, rich people get the choice to work or not. Poor people don’t invest their money and are stuck working for the rest of their lives.

What’s the gap between rich and poor in Latin America?

And in Sweden, the top tenth account for 20% of all national income — while the poorest fifth of Swedes receive almost one-tenth of the total. To make matters worse, the gap between rich and poor Latin Americans has not narrowed down.

How is income inequality in Brazil compared to the United States?

In Brazil, meanwhile, inequality is even more pronounced: The richest tenth get 48% of national income, while the fifth account for only 2% of national income. By comparison, in the United States the top tenth of income earners receive “just” 31% of total income, while the bottom fifth receive 5% of total income.

How are the richest and poorest people in a country divided?

One that is simple — and yet meaningful — is to divide total national income into the portions received by the richest and poorest people in the country. If the income distribution were perfectly equal, the richest 10% in a country would receive just 10% of the national income. And the poorest 20% would receive 20% of the national income.

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