Evaluate the impact of income inequality on economic and social prosperity. Give detailed reference to at least one country.

As per the findings from the World Population Prospects: the 2015 Revision, the prevalence of older individuals—those aged 60 years or older—has notably surged in developed nations and regions. This surge is anticipated to intensify in the forthcoming decades, signifying profound economic, political, and social implications for humanity to confront (United Nations, 2015). This demographic shift is largely attributed to advancements in medical treatments prolonging lifespans and societal changes in employment culture fostering reduced fertility rates (The Council of Europe, 2014).
Some in academic and political circles downplay the significance of this "greying population," asserting that its impact is not immediately palpable, given that these changes occur gradually over extended periods. However, the enduring decline in birth rates and the extended human lifespan could potentially impede economic growth, leading to heightened societal tensions. The implications of an aging population are far-reaching, potentially causing reduced labor participation and unsettling the labor market, consequently affecting commodity markets. The term "demographic time bomb" encapsulates concerns about future generations grappling with a growing number of retired individuals and increased pension commitments, potentially straining younger employees. Underestimating the repercussions of population aging on societal development and well-being could be a grave misstep.
Therefore, this essay aims to delve into the challenges posed by this trend, particularly focusing on its adverse effects on the economic landscapes of developed nations. Additionally, it intends to highlight that while the impact of a "greying population" is substantial, governments can adopt policies to mitigate its effects.
Shifting gears to another pertinent socioeconomic issue, income inequality emerges as a critical concern profoundly influencing both economic progress and societal welfare. The Organization for Economic Cooperation and Development (OECD) has flagged an enduring disparity between the wealthy and the impoverished, indicating a widening gap in economic statuses. This divergence has led to a notable separation between the middle and affluent classes, showcasing unprecedented global income inequality trends. The complex interplay of factors such as evolving family structures, heightened immigration from economically disadvantaged regions, and the impacts of globalization have contributed to the exacerbation of economic disparities in nations across various income brackets.
These trends exist amidst substantial economic growth and prosperity witnessed in numerous countries worldwide, highlighting the paradox of escalating income inequality amid overall economic advancement. Consequently, the ramifications of income inequality reverberate across diverse spheres, including globalization, human capital, and social crises, significantly impacting both economic and social success.
First of all, globalisation changed the reality of the global economy. Globalisation has brought about significant transformations worldwide, as described by Heshmati (2003) who defined it as the seamless movement of goods, services, and capital across borders, facilitating swift and cost-effective connections between individuals and businesses globally. Solimano (2001) suggest that the decrease in inequality observed in many countries following World War II was linked to a reduction in the portion of income derived from capital. This decline was influenced by factors such as the Great Depression, wars causing physical destruction, hyperinflation, and financial crises. Notably, the top 1% saw a substantial decrease in income share since their earnings were more concentrated in capital sources. However, the share of the top 4% or 9% did not decline significantly because these groups relied more on labor income, which was less affected by the aforementioned shocks. Post-World War II, inequality didn't bounce back. The authors attribute this stability in inequality to the implementation of progressive taxation and estate taxes in several developed nations, preventing the resurgence of capital income. It means that such shift has implications for social and economic development. The widening income gap, exacerbated by globalisation, poses challenges to social cohesion and equality of opportunity.