Reducing Disadvantage Arising From Income Disparity

Reducing Disadvantage Arising From Income Disparity

The Priority Direction and Its Significance for Australian Children and Youth

One of the key priority direction that has been identified by The Nest Action Agenda to help in the achievement of the agenda’s shared vision for Australia’s youth and children is reducing disadvantage arising from income disparity. The term disparity is a relative concept. When used with reference to income, it conveys the layman’s idea that some people are rich as compared to others. The term refers to unequal distribution of income. Thus, income disparity refers to the extent of inequality between high and low-incomes. A high income disparity denotes that there is a huge gap between the rich and the poor, while a low level of income distribution means that the income distribution in an economy is better distributed, the gap between the rich is less and wealth is fairly distributed among the citizens.

The extent of income disparityreflects on the fairness of the society people live in. A high level of income disparity is one of the economic problem facing countries and has become a dominant socio-economic issue both in political and academic circles (Mandal & Chandra, 2011, p. 231). According to report by the OECD(2009, p. 88), measures on income disparity are based on data on people’s household disposable income which is the gross household income following deductions of direct taxes and payments of social contributions.

Outcomes of Income Disparity

The negative effects of low-income on children’s health are well documented. While poverty affects people of all age groups, children suffer the most. Growing in poverty affects children in several ways. It impacts children’s development, education, nutrition, environment, disease burden, and medical care(VicHealth, 2011).The effects of income disparity on children are manifold. Primary effects can be attributed to cognitive, physical, social and environmental exposures. Secondary effects can be seen in academic performance and in the disproportionate burden of disease borne by low-income children (Veritta, 2008, p. 152). According to McKeown, De Wit, & Gupta(2007, p. 668), “Child development during the early years lays the foundation for later health and development, children must therefore be given the best possible start in life. Family income is a key determinant of healthy child development and well-being. Children in families with greater material resources enjoy more secure living conditions and greater access to a range of opportunities that are often unavailable to children from low-income families.” The author adds, “On average children living in low-income families or neighborhoods have poorer health outcomes. Furthermore, poverty affects children’s healths not only when they are young, but also later in their lives as adults.”Behrman, Terman, & Lewit(1997) add, “Not only do children from low-income families have access to fewer material goods, but are also likely to experience poor health and to die during childhood. In school, they score lower on standardized tests and are more likely to be retained in grade and to drop out. Teens from low-income families are more likely to have out-of-wedlock births and to experience violent crime. Finally, persistently poor children are more likely to end up as poor adults.”

According to Veritta(2008, p. 152)children from low-income families are more likely to have delayed school readiness, lower school attendance rates, lower test scores, problematic social interactions, and increased risk of developmental delays. Children from low-income families also have less access to healthy nutritious foods and are more likely to rely on processed foods or fast foods, resulting in malnutrition and obesity. They are also at a greater risk for unintentional injuries due to household and neighborhood factors. They have higher exposure to pollutants, toxins, violence, drugs, and other environmental factors that predispose them to negative outcomes. Selden (2006) states that children from low-income families not only have a great number of health problems than children from high and middle income families, but are also more likely to be recurrent and more severe. Furthermore, children from low-income families are less likely to receive well-child visits and immunizations, resulting in poor health supervision. The author adds that children from low-income families are more likely to rely on the emergency department for both primary and acute care visits. They also experience more hospitalizations. Studies of children with special health care needs and children with chronic debilitating conditions show that poor children for low-income families are also disproportionately represented.

The effects of low-income on children health are especially profound because they increase over time, and thus have a cumulative negative impact on the child, family and on society (Dahl and Lochner, 2005). These detrimental effects persist over time, resulting in life-long risks (Bradley and Corwyn, 2002). The earlier poverty intersects a child’s growth and development, the more harmful and long-lasting its effects (Aber, Bennett, Conley and Li, 1997). Poor children may begin life with low birth weight or prematurity due to poor prenatal care, maternal alcohol or substance use; continue with inadequate health care and impaired parental stimulation or interaction, resulting in adult poverty as well as diminished health status.

The Status of Income Disparity in Australia

According to the Economic Issuereport (2013) by the Australian Treasury called, using the Gini coefficient, the report indicated that the income distribution in Australia has become more unequal over the last 30 years. This indicates that inequalities and disparities in income are increasing. Similar findings were presented by the Australian Productivity Commission (2013) and the Australian Bureau of Statistics (2012) which showed that the lion’s share of employment income growth since the 1990s’has gone to the top 10% of income earners, while the bottom 10% had fared relatively poorly. Further, a report by OECD (2014) titled Rising Inequality: Youth and Poor Fall Further Behind noted that the distribution of market income in OECD countries has kept widening even as many countries recover from global economic crisis. The report furtheradds, “The distribution of pre-tax and transfer income remains significantly more unequal than it was before, 10% of the population has continued to decline or to increase less than that of the richest 10%.” This means that increasingly more and more families are being added to the low-income family group and this in extent according to presented literature impacts on the health and well-being of the children forming part of these families.

The most apparent statistical measure of income disparity is the rate of unemployment and income distribution. The rate of unemployment reflects the number of individuals in the population who are not in a position to provide for their basic needs or cannot adequately satisfy their basic needs. Income distribution is obtained through the Gini index which measures income distribution within an economy.According to the Australian Bureau of Statistics, “Employment is the major source of income for most Australian households and brings with it opportunities to utilize and develop skills and to expand social network.” As a result, unemployment affects individuals and their families on financial, personal and social level. ABS (2013) states that, although the rate of unemployment has fallen, it still remains high relative to other OECD countries.Over the years, it has averaged between 5.5% and 6%. However, youth unemployment has remained relatively high. According to ABS (2014), youth unemployment in Australia stands at 12.5% this is way higher than the national average indicating that more youths are unemployed. The report further added that in 2009, 13 percent of the Australian population was considered to be in relative income poverty.

Determinants Contributing to Income Disparity among the Youth and Child

Income disparities within an economy are caused by a number of factors. The most salient cause of income disparity is income differences, while increasing some economists are blaming it on the pathology of social dependency which has evolved from decades of growth in government welfare programs (Ryscavage, 1998, p. 109).Goyal & Goyal(2008, p. 425)identified various additional factors that affect income disparity which in extent impacts on the health and well-being of children and youth. These, the authors identified as: unemployment; corruption; tax evasion that evades the government’s goal of wealth and income redistribution; burden of indirect taxes; credit policy of financial institutions; and inequality of professional training.

Strategies that Will Help Minimize the Gap between the Rich and the Poor

Income disparity can be addressed through a number of approaches. Goyal & Goyal(2008, pp. 428-429) suggested measures such as: employment and wage policies; pricing and distribution policies; fiscal policy; measures to correct regional imbalance.Employment and wage policies involve providing employment to the unemployed by providing opportunities for employment. The government can also reduce income inequalities by introducing measures designed to improve the economic conditions of employees, minimum wages legislation, and bonus Act. Pricing and distribution policies aim at helping the weaker section of the society by adopting policies such as dual pricing for basic needs.Lastly, fiscal policy involves setting up a tax structure in place aimed at minimizing inequality of income, as well as a public expenditure policy that favors the poor through social security benefits and subsidies. The use of progressive tax systems and imposition of death duties and wealth tax are also additional fiscal policies that could address income disparities in an economy.

Ryscavage(1998, pp. 109-112) also identified various measures that can be employed to reduce income inequality. This, the author identified as: first, governments to create employment opportunities as unemployment is a major cause of poverty because the unemployed have little income and therefore have to rely on state benefits; secondly, Increasing of transfers and benefits to the poor; thirdly; use of a progressive tax system; fourth, Making it easier to start and join unions as unions bargain up wages for lower and middle-income workers; lastly, Funding ofearly childhood education. Income inequality is fundamentally a reflection of inequality of opportunity. People from poor families or disadvantaged ethnic groups have harder times attaining a middle-class living that their peers from more privileged backgrounds.

The implementation of these measures will be able to improve the health and well-being of children and youth by reducing the income inequalities in the society. They will serve by increasing their opportunities to access better health, education, and social services, as well as goods thereby improving their overall well-being.


It is apparent that disparities in income can adversely affect the health and well-being of children and youth who come from families that are economically less endowed and have no means to adequately provide for their needs. However, through the adoption of certain measures both at the household level as well as by the government through the implementation of particular policies and steps, inequalities in income can be addressed and this would have the overall effect of improving the economic power of individuals at household level and in extent improve the health and well-being of children and the youth as envisioned by The Nestaction agenda mission.Children are the future of a society. If poverty denies them the opportunities or the environment to grow and develop healthily, they will not be able to succeed and contribute as productive adults.



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