According to the World Economic Forum, income inequality is the biggest risk that faces the global market. Economic disparities caused by global financial system that affects investments, education and government policies have had great impact on the global income inequality ( Maldonado, 2016). The disparities have led to the concentration of the wealth in the hands of the rich as the poor continue to have less access to resources . The financial system affects investments by placing rules and regulation that are only achievable by the rich such as capital acquisition based on security and historic records on investments which are unfavorable to the lower income populations (World Economic Forum, 2016). The education system impacts on income disparities as income varies with educational achievement. Most low-income earners are unable to acquire a valuable education for themselves or their children. The financial system has failed to allocate more funds to improve the education of low-income earners thus continued disparities in incomes (Maldonado, 2016). The poor have no access to educational knowledge that can empower them to higher incomes through employment or investments. The formulation of policies by the individual governments in the world is largely affected by the financial system. The current global trends often challenged by the financial crisis have led to gaps between nations and within the nation (World Economic Forum, 2016). The crisis has triggered income inequalities through a forced decrease in government spending, by reduction of budgets, tax-transfer policies and entitlement policies whose end results is income inequality (Maldonado, 2016). The government role of redistributing wealth is limited by financial crisis, and wealth remains in circulation among the wealthy circles. Taxation of the wealthy becomes difficult as they invest in mobile and transformative investments. The government that deregulates the labor markets contributes largely to income inequalities. Therefore economic disparities through the financial systems of the world impact income inequality by favoring the rich and discrimination against the rich.
References
Maldonado, J. E. (2016). Financial systems and income inequality . Bruges: College of Europe.
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World Economic Forum. (2016). Deepening income inequality. Outlook on the Global Agenda. Retrieved from: http://reports.weforum.org/outlook-global-agenda-2015/top-10-trends-of-2015/1-deepening-income-inequality/
