Economic systems impact income distribution from "summary" of Comparative Economic Systems by Richard L. Carson
The way in which an economy is structured has a significant impact on how income is distributed among individuals in society. Different economic systems have varying mechanisms for determining who receives what share of the total income generated by the economy. In a market economy, income distribution is largely determined by the forces of supply and demand, with individuals earning income based on the value of their labor or the goods and services they provide. Those who are able to offer skills or products that are in high demand will typically earn higher incomes than those whose skills or products are in lower demand. Conversely, in a centrally planned economy, income distribution is often more equalized, with the government playing a more active role in determining how income is allocated among individuals. The government may set wage rates, prices, and production quotas in order to ensure that income is distributed more evenly among the population. However, this can also lead to inefficiencies and lack of incentives for individuals to work harder or innovate, as there is less opportunity to be rewarded for such efforts. In a mixed economy, which combines elements of both market and centrally planned systems, income distribution can vary depending on the specific policies and regulations in place. Governments in mixed economies may intervene to redistribute income through social welfare programs, progressive taxation, or other means in order to address issues of income inequality. However, striking the right balance between promoting economic growth and ensuring fair income distribution can be a complex and challenging task for policymakers.- The way in which income is distributed in a society is closely tied to the economic system in place. Whether income distribution is more equal or unequal, fair or unfair, can have significant implications for social cohesion, economic stability, and overall well-being of the population. Therefore, it is crucial to consider how different economic systems impact income distribution when designing and implementing economic policies.
