Dzholdoshbekova Aidai DMDT-1-22

Dynamics of the Gini index as a reflection of the problem of inequality

in income distribution
In the realm of economic discourse, Daniiar Moldokanov, an insightful
commentator who previously navigated income dynamics, now guides us through
the nuanced terrain of income inequality. Drawing the attention of global financial
institutions such as the World Bank and the International Monetary Fund,
Moldokanov unravels the implications of this intricate interplay between income
and inequality. Illustrating the concept with a straightforward example—where
Alexander earns 90,000 tenge per month, and Iskander receives 100,000—he
underscores the undeniable presence of income inequality. Moldokanov
acknowledges the diverse roots of this disparity, attributing it to factors like
education, professional pursuits, work ethic, and luck, portraying it as a natural
outcome within market forces. This essay aims to explore the profound
implications of income inequality and delve into the reasons behind its widespread
recognition as one of the paramount challenges of our time. This scientific article
on social inequality is written by Victor Gin. The author breaks down the income
gap issues where income inequality is estimated using The Gini Coefficient.
Economic inequality has reached staggering levels globally, with over 50% of
income and 75% of the world's wealth concentrated in the hands of a mere 10% of
the population. Assessing this inequality is possible through measures like the Gini
coefficient and the Lorenz curve, providing insights into the economic disparities
within and between countries. B. Milanovic's examination of income inequality in
his article "Global income inflation in numbers: during history and now" has
historically led us to the study of its dynamics within individual states. This view,
where national governments have a significant impact on income and access to
various benefits, is deeply rooted in a world defined by clear political boundaries.
However, the era of globalization requires a paradigm shift, forcing us to look
beyond national boundaries and consider inequality on a global scale. This shift
reflects a shift from a flat, two-dimensional understanding to a more complex,
three-dimensional one. As our world becomes increasingly interconnected, the
global dimension of inequality is becoming more prominent for two main reasons:
the increased movement of factors of production across borders and the growing
influence of the well-being and lifestyles of people in other countries on their
expectations and income position. While global inequality may not immediately
resonate with the average person as much as inequality in his or her national
community, its importance is undoubtedly growing. In this essay, we will examine
the evolution of three concepts of inequality over the past six decades, exploring
their complex interrelationship and the growing importance of global inequality in
our interconnected world.
The genesis of societal challenges lies in the stark income disparities, where a
minute segment of the population claims an outsized portion of the total earnings.
In Kazakhstan, this economic landscape is vividly depicted, as outlined in
Ekonomist.kz. The Lorenz curve, conceived by Max Otto Lorenz, becomes an
invaluable tool, delineating the distribution of economic goods among distinct
income groups within the populace. A critical juncture in our exploration involves
envisioning an idealized society — a Utopia — where income distribution is
uniform. The Lorenz curve in such a utopian setting transforms into a line of
absolute equality, providing a stark contrast to the real-world scenarios of income
distribution. Conversely, the concept of absolute inequality comes to the fore when
a single individual monopolizes the entire national income, leaving others
metaphorically sustained by mere air. This extreme scenario is graphically
represented by the Lorenz curve transforming into a line of absolute inequality,
portraying a society where one person claims all, and the rest subsist with nothing.
Quantifying these disparities, the Gini coefficient, formulated by Corrado Gini,
provides a numerical measure on a scale from 0 to 1. This scale denotes the degree
of inequality within a society, where 0 signifies absolute equality and 1 points to
absolute inequality. For Kazakhstan, the Gini coefficient emerges as a key metric,
offering insights into the extent of income inequality and its impact on the
economic landscape.
The Gini Coefficient and Lorenz Curve: These tools offer a quantifiable
understanding of societal inequality. The Gini coefficient, derived from the Lorenz
curve, helps gauge economic disparities. This method enables comparisons
between different nations, revealing stark contrasts in income distribution and
societal gaps. Factors Influencing Inequality: Developing economies often exhibit
substantial inequality due to factors like low value addition and a limited middle-
class presence. Conversely, even prosperous countries might grapple with similar
Gini index values as poorer nations, showcasing persistent disparities despite
higher living standards. Mitigating Economic Inequality: Progressive tax structures
and robust social support initiatives play a pivotal role in diminishing the Gini
coefficient. These measures aim to address class discrepancies, working toward a
more equitable distribution of wealth and opportunities.
In exploration, the intricacies of global inequality and its political repercussions
unfold. Two distinct facets beckon our attention, drawing us into the realm of
political philosophy and prompting reflections on the consequences of migration.
Delving into the first facet, a crucial question arises—can citizenship, often
acquired by birth, be viewed as a form of rent, privilege, or even punishment? The
examination navigates the nexus between global inequality and the disparities
rooted in geographical locations. Does citizenship, obtained predominantly at birth,
serve as a determinant granting entitlement to higher incomes? Shifting our gaze
from a national to a global perspective, we probe the potential contradictions
between these two approaches. Turning our focus to the domestic arena, we
witness societies grappling with inherent challenges. Within the confines of a
nation, efforts are made to curtail the advantages bestowed upon those born into
affluent families. The struggle encompasses access to superior education,
healthcare, influential connections, classified information, and, of course, a higher
standard of living. Society endeavors to restrict these inherited privileges,
employing mechanisms such as wealth taxes and universal access to education and
healthcare. Yet, the exploration extends to the global stage, mirroring the domestic
scenario, as wealthy nations pass down substantial material wealth and advantages
to successive generations, resulting in even the poorest Americans ranking
relatively high on a global income scale.
Within the realm of political philosophy, robust arguments emerge both in favor of
and against perpetuating the existing approach. The ethical intricacies of limiting
inherited advantages are highlighted, raising the daunting question of the correct
path forward. The resolution, it seems, lies in elevating this discourse, placing it
squarely on the agenda for open discussion and collective contemplation. Shifting
gears to the second facet, the focus narrows on the critical issue of migration.
Citizenship, an influential factor, accounts for over 50% of the global income
distribution. Three potential avenues to alleviate global inequality unfold—
accelerated growth in impoverished nations, the implementation of global
redistributive schemes (a complex prospect), and the contentious yet impactful role
of migration. Examining the global landscape, seven geographical points emerge,
symbolizing the greatest proximity between wealthy and impoverished nations.
However, these points are not interconnected by open borders but rather marked by
barriers—minefields, patrol vessels, walls, and fences—restricting the free
movement of people. Despite the ongoing economic crisis, migration pressures
persist due to the stark income disparities that remain unbridged. In conclusion, the
age-old adage surfaces—either poor nations flourish, or impoverished individuals
migrate to affluent lands. In essence, these two phenomena, viewed from a certain
perspective, become equivalent. The trajectory of this narrative ultimately rests in
the hands of people—whether the impoverished find ways to enhance their well-
being in their places of residence or opt for prosperity by relocating to different
territories. From a practical political standpoint, the distinction between these two
paths looms large.
In conclusion, the global challenge of concentrated income and wealth distribution
necessitates a multifaceted approach. Utilizing quantitative measures such as the
Gini coefficient and the Lorenz curve provides valuable insights into economic
inequality and guides efforts toward a fairer society. This analytical framework,
demonstrated through the dynamics of income distribution in Kazakhstan,
underscores the intricate interplay between mathematical principles and societal
wealth allocation. As we grapple with the consequences of income disparities, the
Gini coefficient emerges as a crucial quantitative measure, shedding light on the
extent of inequality. The exploration of global inequality, political philosophy, and
migration weaves a narrative that highlights a critical crossroads. The stark
dichotomy between nations rising from poverty and individuals seeking prosperity
abroad underscores a shared responsibility. Now, individuals, societies, and
policymakers are called upon to navigate this narrative wisely, elevating discourse,
dismantling barriers, and collectively exploring a sea of possibilities for a more
equitable and interconnected world.

https://ekonomist.kz/moldokanov/krivaya-lorenca-koeficient-dzhini-dohody-
neravenstvo/
https://journal.tinkoff.ru/guide/gini-index/
https://www.hse.ru/data/2014/03/25/1318951648/Миланович-текст.pdf