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Submitted To:Nusrat JahanLecturer,Sociology Discipline,Khulna University,Khulna

Introduction:

Economic inequalities within countries have increased

significantly since 1990 with income and consumption gaps between

the rich and poor widening even in countries that have

experienced rapid economic growth. Today, we live in a world in

which the top 20% of the global population enjoys more than 70%

of total income and in which the top one per cent owns more than

30% of total wealth and about one quarter of total income.

Inequality is clearly an important issue requiring much more

attention in policy discussion than has been the case to date.

Rather than conflicting with a poverty reduction focus or with

the attainment of the MDGs, this is likely to be important for

the successful attainment of these. Economic inequality very

closely matches lognormal distribution as one traverse the strata

of national and world societies from top-to-bottom. During the

20th century there was considerable divergence between the

economic wealth of developed and developing countries. Richer

countries like the United States and many European countries

converged together towards a GDP per capita much greater than

developing countries such as India and Ethiopia. There are

various schools of thought regarding economic inequality. Marxism

favors an eventual society where distribution is based on an

individual's needs rather than social class or other such

factors. Meritocracy favors an eventual society where an

individual's success is a direct function of contribution

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reflecting an individual's skills and effort, and detrimental

(this is a value judgments) inasmuch as it represent inherited or

unjustified wealth or opportunities. Classical liberals and

libertarians generally do not take a stance on wealth inequality,

but believe in equality under the law regardless of whether it

leads to unequal wealth distribution. Vulnerability has been seen

as a dynamic concept which recognize and capturers change,

poverty has been seen as being static. The field of vulnerability

research embraces an array of different definitions for

vulnerability. Blaikie et al. (1994) define vulnerability as “the

characteristics of a person or group in terms of their capacity

to anticipate, cope with, resist, and recover from the impact of

a natural hazard”. Vulnerability and their linkage is important

in the efforts to improve the standards of living in the world.

Whilst vulnerability has often been closely associated with

poverty, it has also been seen as being distinct. Historically,

vulnerability has been seen as a dynamic concept which recognizes

and captures change, poverty has been seen as being static

(Moser, 1998).

Economic Inequality

Economic inequality (also described as the gap between rich and

poor, income inequality, wealth disparity, or wealth and income

differences) is the difference between individuals or populations

in the distribution of their assets, wealth, or income. The term

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typically refers to inequality among individuals and groups

within a society, but can also refer to inequality among

countries. The issue of economic inequality involves equity,

equality of outcome, equality of opportunity, and life

expectancy.

Economic inequality in Third World Countries:

Economic inequality is existed in Third World Countries. Those

are given below

Unequal distribution of wealth:Unequal distribution of wealth affects

the overall progress of the nation in several ways, and all of

them produce profound negative effects. One of the most dangerous

of these is that less affluent people are so busy just surviving

a country full of heartless people that they have little time to

think of progress and development. A garment factory worker’s

children have little hope of avoiding the fate of becoming

garment factory workers themselves in the future. It is simply

because the cost of standard education is well beyond their

reach. They can dream of no luxury other than just sustaining

their physical existence in an unfriendly and unsympathetic

world. Garment factory workers are deprived of a just salary

because the owners want to pay only what would keep these

unfortunate employees physically able to come back for more work

tomorrow. There are a number of people who own such large

businesses that estimation of their wealth alone is a daunting

4

task! Clearly when such a large amount of wealth is confined to a

very small number of people in such a populous country, it means

a huge number of people – most people – lead lives of abject

poverty.

Occupational inequality:Occupational inequality greatly affects the

socioeconomic status of an individual which is linked with their

access to resources like finding a job, buying a house, etc. If

an individual experiences occupational inequality, it may be more

difficult for them to find a job, advance in their job, get a

loan or buy a house. Occupational standing can lead to

predictions of outcomes such as social standing and wealth which

have long lasting effects on the individual as well as their

dependents. Segregation by gender in the labor force is extremely

high, hence the reason why there remain so many disparities and

inequalities among men and women of equitable qualifications. The

division of labor is a central feature for gender based

inequality. It influences the structure both based on its

economic aspects and construction of identities. However, studies

show that the general overall picture of gender and labor has not

been evaluated. The importance of these issues is pertinent for

the future structure of our labor force.

Poverty in third world countries:

Despite the large numbers of people living in poverty, the

definition of poverty has been the subject of debate. The

mainstream emerging sees poverty as generally being characterized5

by inability of individuals, households, or entire communities,

to command sufficient resources to satisfy a socially acceptable

minimum standard of living. The alternative view understands

poverty as a part of social property relations. Inequality can be

defined in terms of being the opposite of ‘equality’, a state of

social organization that enables or gives equal access to

resources and opportunities to all members. Bangladesh has

witnessed a modest progress in reducing poverty since the early

1990s. However, there is no room for complacency. Still, about

one-third (31.5 percent) of its population is living below the

so-called poverty line (BBS, 2010). Likewise many other

countries, poverty are still a vital concern and challenge for

Bangladesh. The progress of poverty reduction in Bangladesh

requires an in-depth assessment. This report is an attempt to

sketch the current scenario and to make future projection of

poverty and inequality so that we can have a clear image to

generate evidence and insights that can be used to feed into

poverty reduction.

Political instability: Political stability is also precondition for

Economic inequality in third world countries. Unfortunately

political and instability has always been a common phenomenon

here. Besides, no govt. have planned or implemented an industry-

oriented policy.

Others: Managerial inefficiency, corruption and heavy financial

losses, state-owned enterprises were privatized under subsequent

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policies as reported in an ILO study are also responsible for

economic inequality.

Economic inequality in Bangladesh:

Poverty:Poverty is the state of one who lacks a certain amount of

material possessions or money. In this sense, Bangladesh is a

poverty affected country. The number of population living under

poverty line is still increasing. The number of population living

below the poverty line has increased from 51.6 million in 1991-92

to 56 million in 2005 with an annual average rate of 0.314

percent at national level. If the current trend continues, the

number of population living below the poverty line might stand at

57.3 million and 59.8 million by 2013 and 2021 respectively.

However, in rural areas, it might decrease to 40.2 and 38.1

million by 2013 and 2021 respectively. Whereas, in urban areas,

it might witness an increased population of 17.1 and 21.7 million

by 2013 and 2021 respectively living under the poverty line in

urban areas.

Food expenditure, food inflation and general inflation are

positively associated with poverty and inequality. An additional

number of people go under the poverty line with the increase of

food inflation. Food expenditure is positively associated with

the number of people living below the poverty line. This

indicates that the number of people living below the poverty line

also increases with the increase in expenditure on food. If food

inflation increases, more people slide under poverty line.

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Income inequality:During the 1970s and the 1980s, the degree of

inequality in income was not very high in Bangladesh, and there

was no major increase either. Indeed, compared to other

developing countries of Asia (e.g., Malaysia, Philippines,

Thailand), Bangladesh was a country with lower degree of

inequality. That situation continued till 1991-92. But there was

a sharp increase in inequality between 1991-92 and 1995-96. And

there has been further increase during 1995-96 and 2005.Indeed,

Bangladesh can now be regarded as a country with high income

inequality. Furthermore, general inflation and food inflation are

positively associated with income inequality of population. This

indicates an increase in both general inflation and food

inflation has been contributing to rising income inequality.

Complementarity Problem:Poverty may also increase due to the lack

of maintaining complementarity in policies and implementation.

There are many such examples of lack of complementarity. For

example, the tax system of the country is regressive and bias in

favor of rich as the government continues to enhance the tax such

as VAT while there are hardly any concerted efforts in increasing

income tax net and reduction in tax evasion and avoidance of

corporate houses. While the inflation is cropping up, there are

not adequate policies to offset the income erosion of the poor.

Environmental Degradation and Climate Change:Environmental degradation

— the deterioration of the natural environment, including the

atmosphere, bodies of water, soil, and forests — is an important

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cause of poverty. Environmental problems have led to shortages of

food, clean water, materials for shelter, and other essential

resources. This has been further exacerbated by the country being

one of the worst victims of climate change in the world.

Employment Inequality:Employment Inequality by Gender In 1993-94,

employed male population was 57.5 percent and it was 10.6 percent

for female at the national level. The percentage of employed

population for both male and female has decreased to 44.2 percent

and 9.7 respectively in 1999-2000. This might be due to the

beginning of the global recession at that time period. Again, the

percentage of employed male and female has increased to 68.3

percent and 22.9 percent in 2007 from 67.5 percent and 15.2

percent in 2004 respectively at the national level.

Unemployment inequality:Unemployment inequalities by Gender The

number of population who are unemployed are still increasing.

Unemployed population has increased from 1.3 million in 1995-96

to 2.7 million in 2009 with an average of 0.13 million per year.

In case of male, it has increased with an annual average of 0.06

million and for female it was 0.05 million at the same time

period (1995-96 to 2009). Under these circumstances, providing

employment status for the country’s population remains a big

challenge for the government.

Labor Participation inequality:Labor Participation inequality (15+ Age)

Labor force participation rate is the proportion of the

population ages 15 and older that is economically active: all9

people who supply labor for the production of goods and services

during a specified period. The Labor participation rate; female

(% of female population ages 15+) in Bangladesh was 56.90 in

2010.

Measurement of Inequality in the Third World Countries

A study entitled "Divided we Stand: Why Inequality Keeps Rising”

by the Organization for Economic Co-operation and Development

(OECD) reported its conclusions on the causes, consequences and

policy implications for the ongoing intensification of the

extremes of wealth and poverty across its 22 member nations (OECD

2011-12-05).

1. Income inequality in OECD countries is at its highest level

for the past half century. The average income of the richest

10% of the population is about nine times that of the poorest

10% across the OECD, up from seven times 25 years ago."

2. In the United States inequality has increased further from

already high levels.

3. Other traditionally more egalitarian countries, such as

Germany, Denmark and Sweden, have seen the gap between rich

and poor expand from 5 to 1 in the 1980s, to 6 to 1 today.

A study by the World Institute for Development Economics Research

at United Nations University reports that the richest 1% of

adults alone owned 40% of global assets in the year 2000. The

three richest people in the world possess more financial assets

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than the lowest 48 nations combined. The combined wealth of the

"10 million dollar millionaires" grew to nearly $41 trillion in

2008. In 2001, 46% of people in Sub-Saharan Africa were living in

extreme poverty. Nearly half of all Indian children are

undernourished, however, even among the wealthiest fifth one

third of children are malnourished.

Reasons of Economic Inequality in 3rd World Country

There are many reasons for economic inequality within 3rd World

countries. Recent growth in overall income inequality, at least

within the OECD countries, has been driven mostly by increasing

inequality in wages and salaries. The main reason of economics

inequalities of the 3rd World countries are given below.

1. Labor market outcomes: A major cause of economic inequality

within modern market economies is the determination of wages by

the market. Some small part of economic inequality is caused by

the differences in the supply and demand for different types of

work. However, where competition is imperfect information

unevenly distributed opportunities to acquire education and

skills unequal and since many such imperfect conditions exist in

virtually every market, there is in fact little presumption that

markets are in general efficient. In a limit the number of

workers’ wages will not be controlled by these organizations

purely capitalist mode of production where professional and labor

organizations cannot or by the employer but rather by the market.

Wages work in the same way as prices for any other good. Thus,

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wages can be considered as a function of market price of skill.

And therefore, inequality is driven by this price. Under the law

of supply and demand, the price of skill is determined by a race

between the demand for the skilled worker and the supply of the

skilled worker.

2. Self-reported life satisfaction: People in poor countries report that

they are on average less satisfied with their lives than people

in rich countries. The average resident of a low income country

rated their satisfaction as 4. 3 using a subjective 1-10 scale,

while the average was 6. 7 among residents of G8 countries. We

interpret this as a large satisfaction gap. (Hewitt, 1995 and

Clark, 2000).

3. Incomes: A large proportion of the population in developing

countries lives on under $1 or $2 per day. The poor spend a large

proportion of their incomes on food, may lack access to basic

infrastructure, and own few productive assets. However, they do

make consumption choices that involve spending on things other

than food and use a variety of instruments to manage erratic

income streams. Ownership of televisions and radios and access to

electricity and sanitation varies widely.

4. Mortality: On one hand, people in Sub-Saharan Africa are much

worse off, and much more likely to die prematurely, than people

in wealthier parts of the world. On the other hand, those who

live past the age of 5 have strong chances of living to age 60 or

12

so saving a life even from a single cause of death means saving a

person who is likely to live quite a while longer.

5. Morbidity: A third of children under five in developing

countries show evidence of long-term malnutrition. Malnutrition

can cause low energy, diarrhea, anemia, hypothyroidism, poor

vision, and pneumonia, as well as increased susceptibility to

many other diseases. Prevalence of parasitic worm infection is

very high in many poor regions. Malaria causes frequent sickness

among children under 5 who average over 4 days of sickness with

the disease per year.

6. Computerization and increased technology: The 3rd world countries

heavily depend on technology. In the recent years, using of

technology increased rapidly. The poor people cannot properly

used computer and technological advancement from the affluent

people. As a result the poor people become poor and the rich

people become rich. So Computerization and increased technology

is the most important causes of economics inequality.

7. Malnutrition: Malnutrition is a widespread problem in the

developing world. It is estimated that in 2000-2002, over 800

million people in the developing world were undernourished and 2

billion are micronutrient deficient. In 2005, approximately 32%

of children under five in developing countries were stunted (had

a height-for age that was more than two standard deviations below

the global average), which likely reflects chronic under

nutrition throughout life. Malnourishment may be both caused by

13

disease and increase susceptibility to disease. Lacking certain

nutrients has been associated with a wide range of health

problems including low energy, diarrhea, anemia, hypothyroidism,

poor vision, and pneumonia.

8. Globalization: Globalization is one of the major causes of

economic inequality

within the 3rd World countries. Some small part of economic

inequality is caused by the globalization. As a result of

globalization the world come in closure in the human being and

the serious economic inequality were being found in the 3rd world

countries peoples.

9. Education: One important factor in the creation of inequality

is variation in individuals access to education. Education

especially in an area where there is a high demand for workers

creates high wages for those with this education however

increases in education first increase and then decrease growth as

well as income inequality. As a result, those who are unable to

afford an education or choose not to pursue optional education

generally receive much lower wages. The justification for this is

that a lack of education leads directly to lower incomes and thus

lower aggregate savings and investment. In particular, the

increase in family income and wealth inequality leads to greater

dispersion of educational attainment primarily because those at

the bottom of the educational distribution have fallen further

below the average level of education. Conversely, education

14

raises incomes and promotes growth because it helps to unleash

the productive potential of the poor.

10. More regressive taxation: Another cause is the rate at which

income is taxed coupled with the progressivity of the tax system.

A progressive tax is a tax by which the tax rate increases as the

taxable base amount increases. In a progressive tax system the

level of the top tax rate will have a direct impact on the level

of inequality within a society either increasing it or decreasing

it provided that income does not change as a result of the change

in tax regime. Additionally, a steeper progressivity results in a

more equal distribution of income across the board. There is

debate between politicians and economists over the role of tax

policy in mitigating or exacerbating wealth inequality.

11. Impact of gender: In many countries, there is a gender income

gap which favors males in the labor market. Several factors other

than discrimination may contribute to this gap. On average, women

are more likely than men to consider factors other than pay when

looking for work, and may be less willing to travel or relocate.

Thomas Sowell in his book Knowledge and Decisions claims that

this difference is due to women not taking jobs due to marriage

or pregnancy but income studies show that that does not explain

the entire difference. Gender inequality and discrimination is

argued to cause and perpetuate poverty and vulnerability in

society as a whole.

15

12. Multiple occupations: Banerjee and Duflo, (2006) also looked

into how the poor earn their incomes. One pattern they found in

many parts of the world was the tendency of the poor to engage in

multiple occupations. Common occupations were running very small

businesses small-plot agriculture, and day labor. The authors

argue that by spreading themselves across a variety of

occupations and operating their businesses at such small scales,

the poor miss out on gains from specialization and scale

economies

13. Poor health: The poor reported often being sick. Among the

surveys cited by Banerjee and Duflo, (2006), no surveys yielded

an average 'percent of household members sick' (in the month

before the survey) of below 10%, and many reported rates above

25%.

Factors impacting economic inequality

There are many reasons for economic inequality within societies.

Recent growth in overall income inequality, at least within the

OECD countries, has been driven mostly by increasing inequality

in wages and salaries.

Common factors thought to impact economic inequality include:

The labor market: A major cause of economic inequality within modern

market economies is the determination of wages by the market.

Some small part of economic inequality is caused by the16

differences in the supply and demand for different types of work.

However, where competition is imperfect; information unevenly

distributed; opportunities to acquire education and skills

unequal; and since many such imperfect conditions exist in

virtually every market, there is in fact little presumption that

markets are in general efficient. This means that there is an

enormous potential role for government to correct these market

failures. In a limit the number of workers) the workers’ wages

will not be controlled by these organizations purely capitalist

mode of production (i.e. where professional and labor

organizations cannot, or by the employer, but rather by the

market. Wages work in the same way as prices for any other good.

Thus, wages can be considered as a function of market price of

skill.

Taxes: Another cause is the rate at which income is taxed coupled

with the progressivity of the tax system. A progressive tax is a

tax by which the tax rate increases as the taxable base amount

increases. In a progressive tax system, the level of the top tax

rate will have a direct impact on the level of inequality within

a society, either increasing it or decreasing it, provided that

income does not change as a result of the change in tax regime.

Additionally, a steeper progressivity results in a more equal

distribution of income across the board. There is debate between

17

politicians and economists over the role of tax policy in

mitigating or exacerbating wealth inequality.

Education: One important factor in the creation of inequality is

variation in individuals' access to education. Education,

especially in an area where there is a high demand for workers,

creates high wages for those with this education however,

increases in education first increase and then decrease growth as

well as income inequality. As a result, those who are unable to

afford an education, or choose not to pursue optional education,

generally receive much lower wages. The justification for this is

that a lack of education leads directly to lower incomes, and

thus lower aggregate savings and investment. In particular, the

increase in family income and wealth inequality leads to greater

dispersion of educational attainment, primarily because those at

the bottom of the educational distribution have fallen further

below the average level of education. Conversely, education

raises incomes and promotes growth because it helps to unleash

the productive potential of the poor.

Impact of gender: In many countries, there is a gender income gap

which favors males in the labor market. Several factors other

than discrimination may contribute to this gap. On average, women

are more likely than men to consider factors other than pay when

looking for work, and may be less willing to travel or relocate.

Thomas Sowell, in his book Knowledge and Decisions, claims that

this difference is due to women not taking jobs due to marriage

18

or pregnancy, but income studies show that that does not explain

the entire difference. Gender inequality and discrimination is

argued to cause and perpetuate poverty and vulnerability in

society as a whole. Gender Equity Indices seek to provide the

tools to demonstrate this feature of equity.

Malnutrition: Malnutrition is a widespread problem in the developing

world. It is estimated that in 2000-2002, over 800 million people

in the developing world were undernourished (insufficient energy

intake),31 and 2 billion are micronutrient deficient.32 In 2005,

approximately 32% of children under five in developing countries

were stunted (had a height-for age that was more than two

standard deviations below the global average), which likely

reflects chronic under nutrition throughout life.33

Malnourishment may be both caused by disease (such as parasitic

worms) and increase susceptibility to disease.34 Lacking certain

nutrients has been associated with a wide range of health

problems including low energy, diarrhea, anemia, hypothyroidism,

poor vision, and pneumonia.35 We do not know how common or severe

these symptoms generally are among malnourished people.

Malnutrition is sometimes associated with infection with

parasitic worms.36 It is estimated that there are more than 1.2

billion roundworm infections globally, ~700-800 million

infections with each hookworm and whipworm, and 250 million

infections with schistosomiasis.37 While most infections do not

cause symptoms,38 heavy worm infection can cause anemia,

dysentery, and growth retardation.

19

Self-reported life satisfaction: People in poor countries report that they

are on average less satisfied with their lives than people in

rich countries. The average resident of a low-income country

rated their satisfaction as 4.3 using a subjective 1-10 scale,

while the average was 6.7 among residents of G8 countries. We

interpret this as a large satisfaction gap.

Incomes: A large proportion of the population in developing

countries live on under $1 or $2 per day. The poor spend a large

proportion of their incomes on food, may lack access to basic

infrastructure, and own few productive assets. However, they do

make consumption choices that involve spending on things other

than food and use a variety of instruments to manage erratic

income streams. Ownership of televisions and radios and access to

electricity and sanitation varies widely.

Mortality: On one hand, people in Sub-Saharan Africa are much worse

off, and much more likely to die prematurely, than people in

wealthier parts of the world. On the other hand, those who live

past the age of 5 have strong chances of living to age 60 or so;

saving a life even from a single cause of death means saving a

person who is likely to live quite a while longer.

Morbidity: A third of children under five in developing countries

show evidence of long-term malnutrition. Malnutrition can cause

low energy, diarrhea, anemia, hypothyroidism, poor vision, and

pneumonia, as well as increased susceptibility to many other

diseases. Prevalence of parasitic worm infection is very high in

20

many poor regions. Malaria causes frequent sickness among

children under 5, who average over 4 days of sickness with the

disease per year.

Poor health: The poor reported often being sick. Among the surveys

cited by Banerjee and Duflo (2006), no surveys yielded an average

'percent of household members sick' (in the month before the

survey) of below 10%, and many reported rates above 25%.19

Multiple occupations: Banerjee and Duflo (2006) also looked into how

the poor earn their incomes. One pattern they found in many parts

of the world was the tendency of the poor to engage in multiple

occupations. Common occupations were running very small

businesses, small-plot agriculture, and day labor. The authors

argue that by spreading themselves across a variety of

occupations and operating their businesses at such small scales,

the poor miss out on gains from specialization and scale

economies.

Unpredictability and risk: Banerjee and Duflo (2007) argue that what

often separates the 'middle class' (which they define as living

on between $2 and $10 per day) from the poor in developing

countries are steady well-paying jobs, not greater success at

running small businesses.23 Banerjee and Duflo hypothesize that

more reliable income flows may be the reason the middle class

invest more of their income in the future than the poor do.24

(However, we note that it is also possible that, to some degree,

21

people who are more future-oriented in general are the same

people who end up with higher incomes.)

Justifying factors: Countries with a left-leaning legislature

have lower levels of inequality. Many factors constrain economic

inequality they may be divided into two classes: government

sponsored, and market driven. The relative merits and

effectiveness of each approach is a subject of debate.

1. Public education: increasing the supply of skilled labor and

reducing income inequality due to education differentials.

2. Progressive taxation: the rich are taxed proportionally more

than the poor, reducing the amount of income inequality in

society if the change in taxation does not cause changes in

income.

3. Minimum wage legislation: raising the income of the poorest

workers (for the ones that don't lose their jobs due to the

minimum wage)

4. Nationalization or subsidization of products: providing goods

and services that everyone needs cheaply or freely (such as food,

healthcare, and housing), governments can effectively raise the

purchasing power of the poorer members of society.

5. Unionization supportive legislation such as the Wagner Act.

Effects of inequality

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Among the effects of inequality researchers have found include

higher rates of health and social problems and lower rates of

social goods a lower level of economic utility in society from

resources devoted on high-end consumption and even a lower level

of economic growth when human capital is neglected for high-end

consumption.

1. Health and social cohesion: British researchers Richard G.

Wilkinson and Kate Pickett have found higher rates of health and

social problems (obesity, mental illness, homicides, teenage

births, incarceration, child conflict, drug use) and lower rates

of social goods (life expectancy, educational performance, trust

among strangers, women's status, social mobility, even numbers of

patents issued) in countries and states with higher inequality.

Research has shown an inverse link between income inequality and

social cohesion. In more equal societies people are much more

likely to trust each other, measures of social capital (the

benefits of goodwill, fellowship, mutual sympathy and social

connectedness among groups who make up social units) suggest

greater community involvement and homicide rates are consistently

lower.

2. Economic incentives: Many people accept inequality as a given and

argue that an increased gap between rich and poor increases the

incentives for competition and innovation within the world

economy. Some modern economic theories such as the neoclassical

school have suggested that a functioning economy entails a

23

certain level of unemployment. These theories argue that

unemployment benefits must be below the wage level to provide an

incentive to work thereby mandating inequality and that

additionally it is impossible to lower unemployment down to zero.

Many economists believe that one of the main reasons that

inequality might induce economic incentive is because material

well-being and conspicuous consumption are related to status. In

this view high stratification of income (high inequality) creates

high amounts of social stratification leading to greater

competition for status. One of the first writers to note this

relationship was Adam Smith who recognized "regard" as one of the

major driving forces behind economic.

3. Inequality and economic growth: In the 1960s, economist Arthur

Melvin Okun argued that pursuing equality could reduce efficiency

(the total output produced with given resources) by reducing

incentives to work save and invest and through the leaky bucket

of wasteful government efforts to redistribute (such as a

progressive tax code and minimum wages). Some resources will

simply disappear in transit so the poor will not receive all the

money that is taken from the rich. Along the same lines, earlier

writers had argued that wealthier individuals save proportionally

more of their incomes so that more inequality would lead to

higher overall savings and thus capital accumulation and growth.

4. Inequality and housing: A number of researchers (David Rodda,

Jacob Vigdor, Janna Matlack, and Jacob Vigdor), argue that a

24

shortage of affordable housing at least in the US is caused in

part by income inequality. David Rodda noted that from 1984 and

1991, the number of quality rental units decreased as the demand

for higher quality housing increased (Rhoda 1994). Through

gentrification of older neighborhoods for example, in East New

York, rental prices increased rapidly as landlords found new

residents willing to pay higher market rate for housing and left

lower income families without rental units. The ad valorem

property tax policy combined with rising prices made it difficult

or impossible for low income residents to keep pace.

5. Crime: Crime rate has also been shown to be correlated with

inequality in society. Most studies looking into the relationship

have concentrated on homicides since homicides are almost

identically defined across all nations and jurisdictions. There

have been over fifty studies showing tendencies for violence to

be more common in societies where income differences are larger.

Research has been conducted comparing developed countries with

undeveloped countries, as well as studying areas within

countries. The most consistent finding in cross-national research

on homicides has been that of a positive association between

income inequality and homicides.

Perspectives Regarding Economic Inequality

Marxism

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Marxism favors an eventual society where distribution is based on

an individual's needs rather than his ability to produce

inheritance or other such factors. In such a system inequality

would be minimal. Marxists believe economic equality is necessary

for political freedom saying that when there is economic

inequality then political inequality is assured in such a

society currency would be eliminated the means of production

owned in common and non-labor income eliminated (rent and profit

or surplus value). Marxists believe that once the means of

production are owned in common and worked for utility rather than

profit, that all workers receive a voice in a democratic

workplace and the money incentive removed economic equality will

be achieved. Marxist Leninists believe that, during the

transitional period between capitalism and socialism workers will

be paid based on "to each according to labor" as opposed to "to

each according to need".

Meritocracy

Meritocracy favors an eventual society where an individual's

success is a direct function of his merit or contribution.

Economic inequality would be a natural consequence of the wide

range in individual skill talent and effort in human population

and being the result of natural variation individual effort and

voluntary exchange would not be considered ethically problematic

in its own right.

Liberalism

26

Most modern social liberals including centrist or left-of-center

political groups believe that the capitalist economic system

should be fundamentally preserved but the status quo regarding

the income gap must be reformed. Most social liberals favor a

capitalist system Keynesian economics, neoliberals and

progressive taxation. However, classical liberals and

libertarians generally do not take a stance on wealth inequality

but believe in equality under the law regardless of whether it

leads to unequal wealth distribution. In 1966 Ludwig von Misses,

a prominent figure in the Austrian School of economic thought

explains.

The liberal champions of equality under the law were fully aware

of the fact that men are born unequal and that it is precisely

their inequality that generates social cooperation and

civilization. Equality under the law was in their opinion not

designed to correct the inexorable facts of the universe and to

make natural inequality disappear. It was on the contrary the

device to secure for the whole of mankind the maximum of benefits

it can derive from it. Henceforth no man-made institutions should

prevent a man from attaining that station in which he can best

serve his fellow citizens.

What is Vulnerability?

Vulnerability derives from the Latin word vulnerary (to be

wounded) and describes the potential to be harmed physically

and/or psychologically. Vulnerability is often understood as the

27

counterpart of resilience, and is increasingly studied in linked

social-ecological systems .The concept of vulnerability itself

implicit in the concept of health risk which has always been part

of public health. Vulnerability varies according to the level of

development and the health transition stage of countries at any

given time.

According to Clark (2000), “Vulnerability as the risk of adverse

out comes to receptors or exposure units (human groups,

ecosystems, and communities) in the face of relevant changes in

climate other environmental variables and social conditions."

According to the UNDP Bureau for Crisis Prevention and Recovery

(UNDP 2004), “vulnerability is a condition or process resulting

from physical, social, economic and environmental factors, which

determines the likelihood and scale of damage from the impact of

a given hazard”. This definition also encompasses response and

coping since vulnerability refers to the different variables that

make people less able to absorb the impact and recover from a

hazard event.

Generally the term vulnerability refers to exposure to

contingencies and stress and difficulty in coping with them. We

have seen how increased attention is currently being paid to the

concept of vulnerability this section provides a review of the

views of various authors regarding the meaning of vulnerability.

Vulnerability is a pre-existing condition. Research under this

theme concentrates on response and coping capacity including

28

societal resistance and resilience to hazards as well as recovery

from a hazardous event. This approach highlights the social

construction of vulnerability.

Portraits of the Classes

The following material is taken from Charon (1986). The

percentages are rough estimates.

1. Upper Class: The upper-class consists of relatively few

individuals and families (a small executive club) with great

wealth and great power in the economy. Generally the upper-class

inherits their wealth. It comes in the form of property and other

assets.

2. Upper Middle-Class: The Upper middle-class consists of

successful business people executives, professionals, and high

ranking civil and military officials. Ownership of business as

well as prestigious occupations brings wealth to these

individuals. Most have high levels of education.

3. Middle Class: The middle-class consists of professionals semi-

professionals and small business people but people who make up

the middle class are less affluent and occupy fewer prestigious

positions than the Upper Middle class. The middle class includes

nurses, teachers, police officers, and social workers.

4. Working Class: The working class consists of skilled and

unskilled workers (blue collar workers), factory workers, farm

hands, sales personnel, and low-level clerical workers. Usually

29

these positions do not require college. Although many in this

class belong to unions, it is not as a rule an effective

political force. Jobs performed by this group are routine

mechanized and closely supervised. These jobs are less secure

than jobs performed by people in the middle class. The nature of

work performed by the working class has changed.

5. Lower Class: The lower-class consists of the poor. The lower

class experiences high rates of unemployment and dependency on

government employers the state of the economy and landlords.

People from the lower class are not likely to succeed in the

educational system. They experience prejudice from the legal

system. This class seldom exerts itself politically.

Sources of Vulnerability

In the past decade or two we have come to understand better that

vulnerability is cumulative over the life course. Early life

difficulties and their adverse effects interact with later events

in ways that increase the likelihood of poor adult outcomes. The

welfare of adolescent’s young adults and the elderly depends

greatly on trajectories of personal development social and

economic experiences of one’s family and community and stressors

that may be unique to various age groups or to communities at a

particular time.

Causes of Vulnerability in third world countries

30

Many factors contribute to vulnerability. These factors act to

undermine capacity for self-protection blocks or diminish access

to social protection delays or complicate recovery or expose some

groups to greater or more frequent hazards than other groups.

They include

1. Rapid population growth.

2. Poverty and hunger.

3. Poor health.

4. Low levels of education.

5. Gender inequality.

6. Fragile and hazardous location.

7. Lack of access to resources and services.

8. Including knowledge and technological means.

9. Disintegration of social patterns (social vulnerability).

10. Lack of access to information and knowledge.

11. Lack of public awareness.

12. Limited access to political power and representation.

When people are socially disadvantaged or lack political voice

their vulnerability is exacerbated further. The economic

vulnerability is related to a number of interacting elements,

including its importance in the overall national economy trade

and foreign exchange earnings aid and investments interactional

prices of commodities and inputs and production and consumption

patterns. Environmental vulnerability conches land degradation,

earthquake, flood, hurricane, drought, storms Monsoon rain, water

31

scarcity deforestation and the other threats to biodiversity.

(Aysan, l993).

Impact of Vulnerability

Vulnerability is varied in nature and can range from

macroeconomic shock natural disaster, health hazard, personal

insecurity, and socially compulsive expenses such as dowry. Each

of these categories contains rich subset of varieties.

Macroeconomic shocks can be caused by changes in the external

trading environment or as a consequence of domestic policies

(Kamanou, 2002). Natural disasters involve crop damage housing

and similar damages caused by cyclone, ood, river erosion asfl

well as drought and rising salinity. Health hazards include both

expenditures on member illness and livestock death through

diseases. Personal insecurity includes theft, eviction from land,

money cheating, land litigation, physical assault, physical

threats, police harassment, court/police expenses, rape and

abandonment of women. Dowry includes expenses incurred on

daughter’s marriage. Others include death of the main earner.

Measuring Vulnerability

Vulnerability to poverty can be measured as the risk a household

or community will fall into poverty at least once in the next few

years. This means that vulnerability is measured as a

probability. Since the future is uncertain the magnitude of

32

vulnerability rises with the time horizon. Reviewing articles we

tried to merge some important indicators for measuring the

multiple dimensions of vulnerability.

Theoretical Approaches to Vulnerability Analysis

The conception of vulnerability has been amended and adapted in

various approaches. For example, the biophysical approach mainly

focuses on the vulnerability or degradation of biophysical

conditions. The approach extrapolates the biophysical estimates

to the impact on the human occupants of a landscape (Liver man,

1990). This approach is widely used in studies of vulnerability

to natural hazards and climate change (Hewitt, 1995 and Clark,

2000). Key articles from a development and sect oral perspective

include (Bohle and Watts 1993). The human ecological approach

essentially embeds human systems within ecological processes

(Moran, 1990). The Political Economic Approach is based on the

theory of marginalization (Susman, 1983) and food entitlements

(Sen, 1981). It emphasizes the central role that differential

economic and political power play in determining differential

vulnerability of individuals and groups (Greenberg, 1994). The

approach has been criticized for neglecting historical diversity

of response underemphasizing the role of human agency, and

diminishing the role of the environment as an independent factor

that affects social relations (Bryant, 1992). Political

ecological approach to vulnerability uses a political ecological

view in vulnerability analysis. An example of a research project

33

that employed this methodology is a project aimed at

understanding vulnerability in Southern Honduras (Stonich, 1993).

Effects of class vulnerability in third world country A person's socioeconomic class has wide ranging effects. It may

determine the schools they are able to attend the jobs open to

them who they may marry and their treatment by police and the

courts.

1. Education: A person's social class has a significant impact on

their educational opportunities. Not only are upper class parents

able to send their children to exclusive schools that are

perceived to be better, but in many places state-supported

schools for children of the upper class are of a much higher

quality than those the state provides for children of the lower

classes. This lack of good schools is one factor that perpetuates

the class divide across generations. In 1977, British cultural

theorist Paul Willis published a study titled "Learning to

Labor", in which he investigated the connection between social

class and education. In his study, he found that a group of

working class school children had developed an antipathy towards

the acquisition of knowledge as being outside their class, and

therefore undesirable perpetuating their presence in the working

class.

2. Health and nutrition: Members of the working class and

particularly peasantries starve to death at a much higher rate

34

than petite-bourgeois professionals or capitalists. A person's

social class has a significant impact on their physical health

their ability to receive adequate medical care and nutrition and

their life expectancy. Lower-class people experience a wide

array of health problems as a result of their economic status.

They are unable to use health care as often and when they do it

is of lower quality even though they generally tend to experience

a much higher rate of health issues. Lower class families have

higher rates of infant mortality cancer cardiovascular disease

and disabling physical injuries. Additionally, poor people tend

to work in much more hazardous conditions yet generally have much

less health insurance provided for them as compared to middle and

upper class workers.

3. Employment: The conditions at a person's job vary greatly

depending on class. Those in the upper-middle class and middle

class enjoy greater freedoms in their occupations. They are

usually more respected enjoy more diversity, and are able to

exhibit some authority. Those in lower classes tend to feel more

alienated and have lower work satisfaction overall. The physical

conditions of the workplace differ greatly between classes. While

middle-class workers may "suffer alienating conditions" or "lack

of job satisfaction", blue-collar workers are more apt to suffer

alienating often routine work with obvious physical health

hazards injury and even death.

35

4. Class conflict: Class conflict, frequently referred to as "class

warfare" or "class struggle," is the tension or antagonism which

exists in society due to competing socioeconomic interests and

desires between people of different classes. For Marx, the

history of class society was a history of class conflict. He

pointed to the successful rise of the bourgeoisie and the

necessity of revolutionary violence a heightened form of class

conflict in securing the bourgeoisie rights that supported the

capitalist economy. Marx believed that the exploitation and

poverty inherent in capitalism were a pre-existing form of class

conflict. Marx believed that wage laborers would need to revolt

to bring about a more equitable distribution of wealth and

political power.

5. Classless society: Classless society refers to a society in which

no one is born into a social class. Distinctions of wealth,

income, education, culture, or social network might arise and

would only be determined by individual experience and achievement

in such a society. Since these distinctions are difficult to

avoid advocates such as Anarchists, communists, etc. Of a

classless society propose various means to achieve and maintain

it and attach varying degrees of importance to it as an end in

their overall programs.

Conclusion

Among several significant problems concerning the construction of

this index is the method of aggregation. In some highly

36

constrained circumstances when the vulnerability of a region is

well understood, it is possible and perhaps even desirable to

assign weights to the various indicators. In most cases, however,

vulnerability is insufficiently understood, thus making it

impractical to develop a weighting scheme. Moreover, in highly

complex, highly dynamic biophysical or socioeconomic landscapes,

assigning weights to vulnerability indicators is unwise because,

especially in the face of disaster, the causes of vulnerability

change quickly over time and space, rendering many indicators

useless. Consequently, the paper presented a technique based on

Pareto ranking that avoids the need to weight the vulnerability

indicators. It applied the technique to a highly complex,

developed socioeconomic landscape in Hampton Roads, Virginia to

demonstrate the advantage of Pareto ranking over simple averaging

of the component indicators. In the end, however, the measure

presented here only provides guidance for prioritizing

vulnerability mitigation plans. Other factors not considered by

the index, such as cost, might be important considerations when

developing such plans. It is important to return to the point

that the research presented here applied the vulnerability index

to a metropolitan region in a developed country.

37

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