Income Inequality and Poverty

Poverty and Income Inequality
Introduction
Poverty and income inequality draw a great deal of attention from activists, scientists, and politicians who are attempting to propose a permanent solution to these two socio-economic issues. State intervention is often anticipated in this area. There is, however, no agreement regarding the most effective instruments and techniques, as well as regarding the extent of public outlay for the sole purpose of reducing inequality and poverty. Various researches have, as an outcome, been carried out to develop the efficiency of different intervention that is intended to solve the issue of income inequality and poverty that exists in most economies, both in the developing and developed countries. Given the different challenges that are posed by income inequality and poverty within the society, together with the numerous opinions on the various proposed solutions, there is no doubt that there is a need for additional research. This paper is an annotated bibliography that aims to establish the findings by different researchers on the efficacy of the particular solutions that could be utilized in the reduction of income inequality and poverty.
Chotia, V., and Rao, N.V.M. (2017). Investigating the interlinkages between infrastructure development, poverty, and rural-urban income inequality: Evidence from BRICS nations. Studies in Economics and Finance, Vol. 34 No. 4, pp. 466-484.
To solve the issues, this particular paper advocate for the adoption of guidelines and policies that are aimed at reinforcing infrastructure as well as attaining financial growth to alleviate the present poverty levels existing in the BRICS countries. The paper aims to review the relationship between the development of infrastructure, poverty, and urban-rural income inequality for BRICS economies. PDOLS (panel dynamic ordinary least squares) and Pedroni's panel co-integration have been employed to conduct the study. The empirical results confirm a long-run association between the development of infrastructure, urban-rural inequality, and poverty. The PDOLS findings suggest that economic growth and development of infrastructure result in poverty alleviation among BRICS economies. In comparison to the other papers in this review, this is the only paper that examined a non-financial intervention. The results are linked to the fact that development of infrastructure serves to present opportunities of income generation for the impacted communities, presuming that local labor is utilized and that upon completion, the infrastructure opens up the respective community hence presenting opportunities for income generation.
Cyrek, M. (2019). Government social spending in the EU countries: efficiency in poverty and income inequality reduction. Equilibrium. Quarterly Journal of Economics and Economic Policy, 14(3), 405-424.
This paper explains the disparities in the social efficacy of government expenditures in EU nations. In general, the nations with higher social expenditure levels are also those that have lower efficacy in inequality alleviation. However, this relationship does not apply for poverty reduction. The objective of this paper is to identify the efficacy of government social expenditure in the alleviation of problems relating to income inequality and poverty in the European Union nations. To achieve the paper's main objective, the DEA technique is applied, which allows for the comparison of the social efficacy of the European Union nations. Also, the Malmquist index is determined and decomposed to identify the changes in the efficacy as well as their sources in the period of crisis. The data utilized in the investigations were obtained from OECD and Eurostat databases, and they cover the duration from 2007 to the year 2016. The study proposes some change between the degree of social expenditure and efficacy for the dimensions of inequality.
Chiazor, I. A., Egharevba, M. E., & Ozoya, M. I. (2016). Widening Inequality and Poverty in the Developing World-Micro-Financing as a Viable Solution. The Social Sciences, 11(13), 3286-3293.
Despite the broad literature on this topic, there appears to be contradicting opinions regarding the best solution to tackle the rise in inequality in the developing economies. However, one thing that experts agree on is that even though there might be other objective reasons for the increase in poverty and inequality, governments' implementation of microfinance approaches on a macro scale might be among the most efficient ways of stopping this rise. The objective of this particular study is to clarify the great capacity that microfinance has an instrument for poverty reduction. If properly managed, microfinance is an effective tool for reducing poverty among the poor or turning around the fortunes of the poor, thus helping to close the scary gap that exists between the poor and the wealthy in the developing nations. This paper has some similarities to the study and findings by Cyrek (2019), whereby increased expenditure by government in a society that is characterized by income inequality and poverty has a positive impact in alleviating poverty levels as well as reducing inequality.
Bonito, J. D. M., Daantos, F. J. A., Mateo, J. C. A., & Rosete, M. A. L. (2017). Do entrepreneurship and economic growth affect poverty, income inequality, and economic development. Review of Integrative Business & Economics Research, 6(1), 33-43.
This paper argues that financial growth plays an important role in economic development, income inequality, and poverty. In the Philippines, entrepreneurship affects economic growth but little to no effect on income inequality and poverty. This study evaluates the impact of entrepreneurship, determined by the number of medium, small, and micro-enterprises and economic development, determined by regional GDP on economic growth, income inequality, and poverty in the Philippines. The study utilized regional data to get an adequate number of observations, derived from official state documents. The findings suggested that economic development plays an important part in income inequality, economic growth, and poverty; in the Philippines, entrepreneurship has an effect on economic growth but little to no effect on income inequality and poverty. These findings correspond to the findings by Chiazor et al. (2016) and Cyrek (2019) that increasing the moneys circulating within these regions is capable of solving the issue of income inequality and poverty.
Omar, M. A., & Inaba, K. (2020). Does financial inclusion reduce poverty and income inequality in developing countries? A panel data analysis. Journal of Economic Structures, 9, 1-25.
This study assesses the role of financial inclusion in fighting income inequality and poverty through opening blocked development opportunities for the disadvantaged parts of the population. The study examined the effect of financial inclusion on alleviating income inequality and poverty, as well as the determinants, together with the conditional impacts thereof in 116 developing nations. The examination is conducted utilizing an unbalanced annual panel data covering the period from 2004 to 2016. For this particular purpose, we develop a fresh index of fiscal inclusion utilizing a wide set of economic sector outreach pointers, establishing that per capita income, a ratio of age dependency, internet users ratio, income inequality, and inflation considerably affect the extent of financial inclusion in the developing nations. The findings offer proof that fiscal inclusion considerably alleviates income inequality and poverty in the developing nations. This study's results correspond to the findings by Chiazor et al. (2016), Cyrek (2019), and Bonito, et al. (2017) that economic interventions are an effective solution in dealing with income inequality and poverty.
Conclusion
This paper aimed to determine the efficiency of the different solutions that could be utilized to alleviate income inequality and poverty. The findings are that any intervention or solution that serves to increase the flow of money within these populations has a positive impact on alleviating income inequality and poverty. These interventions can either be indirect or direct, and the respective governments are well-positioned to develop and deliver these interventions/solutions.
References
Bonito, J. D. M., Daantos, F. J. A., Mateo, J. C. A., & Rosete, M. A. L. (2017). Do entrepreneurship and economic growth affect poverty, income inequality, and economic development. Review of Integrative Business & Economics Research, 6(1), 33-43.
Chiazor, I. A., Egharevba, M. E., & Ozoya, M. I. (2016). Widening Inequality and Poverty in the Developing World-Micro-Financing as a Viable Solution. The Social Sciences, 11(13), 3286-3293.
Chotia, V., and Rao, N.V.M. (2017). Investigating the interlinkages between infrastructure development, poverty, and rural-urban income inequality: Evidence from BRICS nations. Studies in Economics and Finance, Vol. 34 No. 4, pp. 466-484.
Cyrek, M. (2019). Government social spending in the EU countries: efficiency in poverty and income inequality reduction. Equilibrium. Quarterly Journal of Economics and Economic Policy, 14(3), 405-424.
Omar, M. A., & Inaba, K. (2020). Does financial inclusion reduce poverty and income inequality in developing countries? A panel data analysis. Journal of Economic Structures, 9, 1-25.