The paper "Economic Crisis and Inequality" is a wonderful example of an assignment on macro and microeconomics. Using different factors to calculate the income distribution and consumption pattern has created inequality as it results in the use of different variables which provides different results, thereby creating inequality. The prime reason which can be attributed to the inequality between developed and developing countries is the mechanism which is adopted for calculating disposable income, which gives rise to different income level making it difficult to estimate the figures correctly. Since imputed rent or imputed labor is not considered a part of a disposable income and is not included while calculating the income of a household or an individual it results in different estimates which thereby arrive at different figures for both the developed and developing countries.
In the case of developing countries imputed rent or imputed labor which a person puts while working at home or staying in his own place is considered a part of the disposable income; whereas in developed countries, it is omitted which thereby creates differences between the estimates of both the countries i. e.
developed and developing countries. This has been supported by the fact that certain items like of durables which is excluded from the consumption expenditure but included in the income estimates make it difficult to calculate the same values resulting in inequality and differentiation between the estimates of both the developed and developing countries (Ortiz and Cummings, 2012). Since, the different factors which are considered while calculating the disposable income and income level differs it has resulted in developing different variables which are used for the calculation and estimation of different components.
As a result the estimation of disposable income and income level is based on different underlying variables and use the different form of statistics through mean and median where the upper 5 and lower 5 percentile of the population is included to ensure that the estimates becomes more accurate and facilitates comparison between the different variables.
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