WikiWealth

Income inequality has a negative effect on the economy in many countries. It makes it difficult to move from one social economic status to the next. It also create disincentives to work hard, because social economic mobility is impossible.

"Official data for the last three decades show that Brazil has one of the world's most unequal distributions of income. This article examines the relevant data and then explains the causes of this persistent inequality, considering them also in cultural and historical context. It discusses the politics of continuing inequality and possible strategies for reducing it.

Many economic hardships occur when dealing with income inequality. Income inequality is a reflection of how economic systems distributes wealth unevenly to the citizens.

The middle class usually has a large influence on economic development and government policies. If income is unevenly distributed, the the wealth exert dominant control over poorer citizens, which may create political and economic tension between the classes. The tension can result in strikes or other forms of demonstrations that acutely hurt production and growth. More general tensions may result in a submissive underclass that has no ability (skills) or incentive to work hard."

Source:http://findarticles.com/p/articles/mi_qa4000/is_200407/ai_n9453975/"Income Inequality" will have a long-term negative impact on this entity, which subtracts from the entity's value. This statement will lead to a decrease in profits.