4.2 Poverty and Inequality Flashcards
What is poverty?
Deprivation of well being
Low incomes and the inability to acquire the basic goods and services necessary for survival with dignity
Absolute Poverty
When people cannot obtain adequate the basic goods and services necessary for survival with dignity
Relative Poverty
When people do not enjoy a certain minimal level of living standards enjoyed by bulk of population
International poverty line
An income level established by the world bank to determine which people in the world are poor
Causes of Poverty
Environmental
Gov
Economics
Health Care
Demographics
Social Factors
Factors of Absolute Poverty
Lack of education
War
Crime
Political Instability
Environmental Infrastructure
Factors of Relative Poverty
Unemployment
Economy
Government
Income inequality
Rental costs
Policies to reduce absolute poverty
Mass immigration
Encourage economic development
Diversification of economy away from agriculture to manufacturing (Lewis Method)
Education- greater spend and better skilled workforce
Foreign aid
Policies to reduce relative poverty
Benefit system
National Minimum Wage
Jobseekers allowance
Progressive tax
Income is…
Money paid to an individual or family
Wealth is…
The value of assets owned
-Savings
-Property
-Shares
-Land
Causes of income inequality
Background- Area, education, family wealth
Tech- Structural unemployment
Change in income tax
Increased profits earned by multinationals
Increased international trade
Effects of Income Inequality
Change in savings
Reduction in consumer spending
Increased incentives to try earn more
Increased debts
Decreased productivity from low payed workers
Gini Coefficient
Measure of income inequality that condenses the entire income distribution for a country into a single number between 0 and 1- The higher the number the more income inequality
Gini Coefficient Formula
G= A/A+B
G: Gini coefficient
A: Area A, the area between the diagonal and the lorenz curve
A+B: the whole area under the diagonal of equality
