IndexProblem StatementIntroductionIncome Inequality MetricsWage InequalityIncrease in Real GDPTotal Income Equality and Its ConsequencesFinancial Instability and DeclineConclusionThere is a lot of research conducted on the relationship between income inequality and economic growth. Inequality can be considered from many perspectives: economic, social and political. In solving this problem, economics is also used for the empirical and theoretical vision. Lack of regulations and insufficient funding are just some of the reasons that affect almost everyone. Many economic authors argue that it is difficult to analyze the impact of income inequality on growth when other factors that influence it are not taken into account. The purpose of this research is to examine the impact of income inequality on economic growth and whether it can be reduced. The theoretical framework of this research analyzes concepts such as economic growth, income inequality and the relationship between the two. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original EssayProblem Statement Globally, especially after World War II, income inequality is the most frequent topic of global debate. The long-term negative influence on economic growth is caused by growing income inequality. Therefore, the causes and treatment channels to solve this problem are crucial for financial stability and development. Introduction The term inequality is used a long time ago and has its roots in history. Individuals often relate this to the different opportunities they have. Furthermore, the concept of opportunity may be important and affects many areas, but the causes of income inequality are much deeper. Considering that there are more poor than rich individuals in the global picture, it shows that inequality affects most people. In the United States, since 1970, income inequality has increased and many researches mention the gender wage gap as an important issue. It is important to remember that the difference between historical periods, the differences between countries and individual incomes help to examine the determinants of inequality itself. The United States gained stable household incomes in the 1950s and 1960s, while from 1965 to 1979 the United Kingdom reduced earnings trough. However, the US trend until the 1970s is explained by Kuznets' theory that the US was one of the most industrialized countries in the world. Nowadays, Kuznets' theory is less relevant because there is more focus on the service sector rather than agriculture and manufacturing. The economist Adam Smith in his book The Wealth of Nations states that: "A man educated at the expense of much labor and time in any of those employments which require extraordinary dexterity and skill...". This statement shows the importance of investing in education and human skills because individuals with a higher level of education and efficient skills are more likely to have a higher income than ordinary ones. However, we must consider that the opportunity to study not all individuals have and even if they do, having the same opportunities, does not guarantee that each of them will have the same skills and will actually graduate. Wage inequality plays a significant role in determining an individual's income and overall standard of living in general. On the other hand, wages are the easiest to measure, usedin many studies and on which many data sets are available. Poverty is mostly increasing and the situation is getting worse instead of better and many authors mention government corruption as the main reason. Available data shows that there is a high correlation between government corruption and social exclusion which affects income inequality. The interesting fact mentioned by research is that social exclusion is more relevant in predicting corruption than GDP per capita. Regarding the gender wage gap, studies show that there are still differences in their wages, stating that women and men men do not work and do not operate in an equal labor market and there may also be differences in employment. As for theories that explain the causes of income inequality, it is also important to know how to measure it. The concept of equity or even the term poverty is different from inequality. Famous economists such as T. Malthus, D. Richard and A. Smith mainly focus on considering factors such as capital labor and capital to solve this problem. Modern economists, when compared to the classical ones above, focus more on the income of the individual family. Wage Inequality There is something common to all societies and that is that none of them have a fair share and the same distribution of wages. The distribution of wages was best measured by the Gini index. The goods are not equally shared, however the differences explained by the Gini index represent a range between 0 and 100. According to the author Anthony B. Atkinston in his book "Inequality" explains that the inequality or Gini coefficient shows that India and China are close to 50 percent, and over 40 percent, which is high, is found in Brazil and Mexico, including other Latin American countries. Considering this, the United States follows and then the United Kingdom. When it comes to comparison based on the Gini coefficient, continental Europe has higher income inequality than the Nordic countries. Since 1962 there has been an increase in wealth from 11% to 16% in 1995, in the United States. Greater wealth makes people more secure and also participates in political power. Furthermore, the wealth of the United States is not equally distributed among its citizens. Increase in Real GDP Increase in real gross domestic product shows economic growth, and GDP is used to measure national income (wages, interest, rent, profit). Researchers have shown that increased economic growth does not guarantee increased wages. It may happen that GDP increases while the average wage does not change or even decreases. This can be explained by the fact that profits represent a large part of GDP. The other fact is that the increase in real GDP cannot be seen when there is also an increase in population. This means that if there is a 4% increase in population and the same percentage in real GDP, there will be no change in GDP per capita or real wages. However, a company can earn higher profits but not necessarily share it with the employees' profit. Total income equality and its consequences In some underdeveloped countries, some individuals even live below the poverty line, and the greater inequality is directly related to the greater percentage of individuals living poor. Researchers, based on a survey, say that some individuals are in favor of total equality, meaning that everyone will earn the same amount, while others still argue that too equal distribution of earnings is not the best solution. According to Lawrence and Skocpol who conducted an investigation on this matter, they stated that the.