Comparison of Gini coefficient

Question: Discuss about the Comparison of Gini coefficient. Answer: Introduction: According to World Bank, Gini coefficient is the indicator of dispersion of income distribution among households from a perfectly equal distribution (oecd.org, 2016). The income Gini coefficient of OECD countries is given below: Gini Coefficient index during 2014 New Zealand 0.333 United states 0.394 United Kingdom 0.358 Switzerland 0.295 Ireland 0.244 Turkey 0.393 Australia 0.337 Chile 0.465 Table 1: Gini coefficient index (Source: oecd.org, 2016) As stated by Fyers Kirk (2015), Gini coefficient close to zero indicates less inequality among people of different income distribution in an economy. On the other hand, the value close to 1 indicates high inequality and less human development in the economy. High inequality indicates gap between high and low income group is wider and low income group people are excluded from socio economic facilities. The above table shows that income inequality in New Zealand is less than US and UK. However, income inequality is lowest in Ireland among the OECD countries. It can be inferred that economic policies have been implemented in a better way in Ireland in comparison to New Zealand. Economic growth and development of industrial and service sector are important factors that ensure income distribution. Differences in wealth are also cause of differences in income distribution. Differences in government policies regarding salaries, taxes and other development policies, human capital formation, industrialisation are reasons for differences in Gini coefficient across countries. Development of small industry in New Zealand compared to the large industries is one of the reasons that attributes to the inequalities in the economy and rising Gini coefficient in this country (inequality.org.nz, 2016). References Fyers, A. Kirk, S. (2015). Income inequality: How NZ is one of the worst in the world. stuff.co.nz. Retrieved 2 January 2017, from https://www.stuff.co.nz/national/politics/68600911/income-inequality-how-nz-is-one-of-the-worst-in-the-world inequality.org.nz. (2016). Understand inequality. Retrieved 2 January 2017, from https://www.inequality.org.nz/understand/#!prettyPhoto oecd.org (2016) OECD Income Distribution Database (IDD): Gini, poverty, income, Methods and Concepts. Retrieved 2 January 2017, from https://www.oecd.org/social/income-distribution-database.htm