Arguments in favour of income inequality

  • Encourage mobility of labour which increase employment
  • The poor provides cheap labour while will lead to increased production in the economy
  • It increases government revenue to the government especially where progressive taxation is imposed.
  • Creates smooth working relationship between the employer and the employee.
  • Encourages hard work The poor are encouraged to work harder to catch up with the rich and the rich will work. The rich people have a high marginal propensity to save and later to invest. This creates job where the lower cadres can be employed and will be able to earn and income encourage businessmen to undertake investments in areas that are risky In a mixed economy people taken place and this contributes to efficiency and improvement in quality
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