Distribution of Income and Wealth, Poverty and Inequality Flashcards
(17 cards)
wealth inequality vs income inequality
income : income durr (e.g. salary)
wealth: assets
measures of inequality
gini coefficient
gini coefficient and what is englands
describes level of inequality
(0 is perfectly equal, 1 is completely unequal)
england is around 0.35-0.39
which is average for developing country, not as good as like scandinavia tho
lorenz curve
lorenz curve measures the distrubution of income and wealth within a country/economy
where would you find a lorenz curve and what does it look like
you could find it on a graph
with x axis (horizontal) measuring distribution of households
and y axis (vertical) measuring the % of income cumulatively
there will be a line of perfect equality which is just straight going upwards (like supply curve)
lorenz curve is the real distribution and is curved below the line of perfect equality, showing the inequality, with of the % of income not being spread evenly
gini coeffecient formula
(a / a + b)
a is the difference between the line of perfect equality and. the lorenz curve, and b is the space below the lorenz curve)
what is the issue with equity
its subjective, can never be truly achieved in everyones eyes,
based on ‘fairness’
causes of income and wealth inequality
inequality of wages (can be caused by difference in skills, e.g. degrees - or discrimination, e.g. undesirable labour in the labour market)
welfare payments + regressive taxation
unemployment - structural , geographic, seasonal
inequality between countries
natural recourses
trade activity (primary versus tertiary sector)
human capital (education, skills)
geographic infrastructure (how easy it is to export/import goods)
kuznets curve
its a n shaped curve
with x axis (horizental) showing income inequality and y axis showing gdp
the peak of the n reflects the point of industrialisation, when gdp keeps increasing and income inequality starts to decrease
shows industrialisation decreases income inequality whilst also increasing gdp (growing gdp benefits everyone rather than just the few)
benefits of increased equality
improved social cohesion + stability (e.g. sweden and scandanavia)
higher ad (increased consumption and incomes/investment)
better opportunities
and human capital value (education, skills, etc.)
costs of increased equality
costs of production increase
requires government intervention to get there (costly)
inflationary pressure
reduction in incentive to work / save / invest
due to higher taxation and welfare payments required to lower inequality
would decrease productivity and innovation
relative poverty
less than 60% of median income of the country
23,900 for uk household and below = relative poverty
absolute poverty
living on less than $1.90 a day
causes of poverty
natural disaster (less ownership)
war (less ownership + cannot work)
health problems (cannot work)
taxes (regressive)
welfare payments (too low / not tapered off enough)
inequality (structural)
political corruption / opression
impacts of poverty
decreases the healthcare /health rate
decreases education levels / standards
(decreases hdi)
decreases ad (consumption)
poorer housing
increases in crime
mental + physical health issues
increase mortality ^^
increase government spending
government policys to alliviate poverty
increase investment in education + nhs (mental + physical)
progressive taxation
increase welfare payments + slower tapering off
increase minimum wage
increased financial education + opportunities awareness
pay ceilings/subsidies on bare necessities (e.g. food, housing, electricity)
increase spending on housing / public services
economic growth (decrease unemployment, increase investment)
