4.2 Poverty and inequality Flashcards
Define absolute poverty
when your resources are well below your minimum needs - earn under $1.90 a day
Define relative poverty
Households earning less than 60% of the median income. Can be measured using the Lorenz curve or Gini coefficient
Name 5 causes of poverty
- Unemployment
- Low education
- Inadequate benefits
- High cost of living
- Discrimination
What 3 things does the multidimensional poverty index measure?
Health, education, standard of living
What three things does HPI measure?
Life expectancy
Education
Living standard
Name 3 causes of change in absolute poverty
War
Corruption
Lack of welfare state
Name 3 causes of change in absolute poverty
Education provision
High living cost
Unemployment
Hwo do economists measure inequality
Lorenz curve and gini coefficient
gini coefficient formula
A / (A + B)
What does a Gini coefficient above 0.4 show
High inequality, linked to political instability and social tension
5 Causes of income and wealth inequality in developed countries
Pay differences
Progressive/regressive tax
Welfare system
Wealth taxes
Unemployment
5 Causes of income and wealth inequality in developing countries
Urban/rural divide
Lack of trade unions
Globalisation favouring rich, factor owner
Lack of welfare state
Unemployment
terms of trade formula
index of export prices/index of import prices
What is the prebisch-singer hypothesis?
the terms of trade for countries who specialise in primary products will decline over time, as relative prices are falling (due to rising global income and low price elasticity of commodities)
Name 4 causes of income and wealth inequalities between countries
- Exploitation of low wage workers/supply chain benefits to developed countries
- Uncertainty / unrest from natural disasters, wars, famines etc.
- Terms of trade low for countries with primary product dependencies (Prebisch-Singer hypothesis)
- Access to natural resources and Geography: Land-locked vs access to ports
