Distribution Of Income And Wealth Flashcards
(9 cards)
Define Distribution of income
How the wealth in an economy is shared between groups
What percentage is distribution of income and wealth broken up into
20 percent
What graph shows distribution of income and wealth and draw it
Lorenz curve
How does skills biased tech changed cause inequality in income and wealth
Replaced middle skilled jobs
|
Demand of high skilled works increases
|
Shipbuilders replaced by robots
|
Middle skilled jobs take up
Low skilled jobs
|
Therefore there wages decrease
|
While high skilled workers who make the robots wages increase due to increase demand
How does changes in tax payments cause inequality
Tax system becomes less progressive so high earners are charged proportionately so less of their money goes towards tax compared to the poor
How does executive pay cause inequality
Barclays ceo was paid 14x the average in 1979 when in 2017 it massively increased to 169x the average. The demand for ceos is increasing while the supply is decreasing causing wages to increase. These ceos are seen to be deserved as they hugely impact the performance of the business.they can also increase their income via other streams of income from overseas due to globalisation
How does the policy of increasing transfer payments and benefits increase the wealth and income of the poor and evaluate
The poor households who are struggling to survive in the current economic atmosphere are given benefits to survive this is going to be given mostly to the families in the bottom 20% therefore its going to increase their income more than the gini coefficient so its decreasing the inequality
Evaluation
Can cause a poverty trap as families can becomes used to not working as they dont have an incentive to work
How does progressive and regressive taxation reduce inequality
Progressive taxation involves increasing the allowance of how much you can earn before you pay tax on that income.Therefore the poor are going to be affected the most this is going to increase their income. Regressive involved increasing tax on goods such as cigarettes and fags as the rich spend the most on these goods this is going to decrease their income and affect them the most.
Evalution
May act as an incentive for high skilled workers to stop working as hard therefore they wont work as hard and high skilled workers is vital for a countries growth
How does increasing the national wage reduce inequality
By increasing the national minimum wage the poor are going to be affected the most as they are more likely to be on nmw increase their income. Also it acts as an incentive to the poor who aren’t working to start working
Evaluation
This is only going to affect the poor if they ate working
