GMBA6008: Macroeconomics for Manage - Economics Assignment Help

Assignment Task:

Research Essay Topics and Suggested Guidelines

Topics: Income Inequality, Economic Growth, and Macroeconomic stability

Background: 

There have been numerous academic and media reports in recent years about the growing income inequality in many nations, for example, the richest 1% of the population in many countries (Australia included) often own as much, if not more, than the bottom 60% of the population. Theses research has been arguing that income inequality is one of the major causes for recent macroeconomic and financial instability such as higher unemployment, poverty, frequent financial crises like the GFC 2007-2008. 

One of the underlying causes of income inequality is the trend of falling wage share growth in all over the world. The wage share of the gross domestic product (GDP) has fallen significantly in most OECD nations as well as most of the nations around the world during the past three decades. This trend has been well documented in one of the reports prepared by the International Labour Organization (ILO 2012/2013), which has revealed the dip in global wage share over the last three decades and the driving forces behind it. Data on movements in the wage share of national income is readily available for most OECD nations. 

A very recent investigative newspaper article sheds light on some of the factors that contributed to the smallest pay rise for the Australian workers since World War Two.  Australia's leading labor market analysts warn that "Wages stagnation [is] contributing greatly to rising financial fragility” and causing a ‘a new types of poverty. Read here, and here for more info. 

Until fairly recently, many organisations (including the IMF and World Bank), governments and famous economists such as Arthur Laffer claimed that some degree of income inequality was good for economic growth (see here for more about Arthur Laffer). 

However, now times have changed. Today, the wage-price spiral is dead and gone and now organisations such as IMF suggests that higher income inequality for a country can reduce its economic growth, see one of the Recent IMF work.   

In your research essay, investigate and critically analyze the following questions:

• How did we get here? In your answer, discuss the possible links between slower wage growth and the rise of income inequality in a country such as Australia.

• Does inequality matter? Why do you think growing inequality is detrimental to long-term economic growth? Your Opinion

• Why some economists for instance Arthur Laffer argued that some inequality is good for economic growth? What was the basis for this argument?

• Suggest in the conclusion the kind of macroeconomic policies (e.g. fiscal policies, monetary policy) would you recommend addressing the income inequality for achieving sustainable economic growth and stability for a country such as Australia.   

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