NaimExplain

How can governments reduce income inequality throughout tax and expenditure policies? The government can Promote market oriented economic growth,  direct basic health and education services to the poor, and  develop social safety nets to assist individuals unable to take advantage of market opportunities.

What is Lewis's surplus growth model explains inequality promotes growth how? Two sector model: agriculture and industrial. When it begins, the industrial sector faces unlimited supplies of labor as it is able to draw workers at low or even zero marginal product from the agricultural sector. Wages are held down by the elastic supply of workers and industrial growth is followed by a rising share of profits. Average income rises, and labor receives a smaller share of the total, which increases inequality. The turning point is when all surplus labor is used and supply of labor becomes more inelastic. Then, wages and labors share of income starts to rise and inequality falls.