The paper 'Inequality and Recession in Britain and the USA ' is a great example of a Macro and Microeconomics Assignment. The different factors which have resulted in highlighting inequality exist because of the different variables which are used to in calculating the manner in which income distribution and consumption pattern are identified. The differences in inequality exist because of the fact that the difference in the income level especially between the developed and developing countries exists due to differentiation in estimating the disposable income. The fact that the imputed rent or imputed labor is not considered in estimating the consumption or income level of an individual or household results in creating a gap between the developed and developing countries.
The fact that the income level in developing countries is largely dependant on the manner in which the individual member working in the house or using his own place to stay is not considered results in wide differentials between the income of an individual in a developed an developing countries. In addition to it, the inclusion and exclusion of different items like the purchase of durables which is excluded from the consumption expenditure but included in the income estimates result in creating inequality and results in differences between the income levels of people belonging to different countries (Ortiz and Cummings, 2012). The change which has been witnessed in determining the different factors which will be included in the estimation of income level has resulted in changing the underlying variables.
This has given rise to estimating the income or consumption level based on the different estimates which are available and look towards creating a mean and median by including the upper 5 and lower 5 percentile of the population so that the estimates become accurate.
The changes have further been determined and estimated in the manner where the different variables like the inclusion of imputed rent or labor are considered whereas the expenditure made on luxurious items or durables is excluded. This gap existed when the income level was estimated for developing countries and developed countries as the inclusion of the different items resulted in widening the gap between the level of income and made inequality to exist.
Atkinson, T. and Morelli, S. (2011) “Economic Crisis and Inequality’ United Nations Development Programme (UNDP) Human Development Reports, November 2011
Banerjee, A.V. and Duflo, E. (2000) Inequality and growth: what can the data say? NBER Working Paper No 7793, July
Bao, Y. and Guo, J.T. (2004) Reexamination of economic growth, tax policy and distributive politics. Review of Development Economics 8(3): 474-482.
Irvin, G (2011). Inequality and Recession in Britain and the USA Development and Change. Available at: http://www.george.irvin.com/D%26C.pdf
Lansley, S. (2012) The cost of inequality London: Gibson Square
Matsuyama, K. (2002) The rise of mass consumption societies. Journal of Political Economy 110(5): 1035-1070.
Ortiz, I. and Cummins, M. (2011) Global Inequality: Beyond the Bottom Billion. Unicef Social and Economic Policy working paper, April 2011 http://www.unicef.org/socialpolicy/files/Global_Inequality.pdf
Ortiz and Cummings, (2012). UN HDI website; Wealth Report; World Income Inequality Database see: http://website1.wider.unu.edu/wiid/WIID2c.pdf pp.4-7
Wilkinson, R. and Pickett, K. (2009) The Spirit Level: Why More Equal Societies Almost Always Do Better Bloomsbury Press