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Flashcards in Income Inequality Deck (18):
1

market forces

the forces of supply and demand that represent the aggregated influence of self-interested buyers and sellers on the price and quantity of goods and services offered in a market. When we discuss income inequality we are interested in how these forces play out in labor market and determine how much workers are paid for their labor.

2

skill-biased technological change

when a technological change like computerization produces an increase in the demand for skilled workers, so that as the demand for these highly educated workers and their productivity increases, so do their wages.

3

rent

economic returns on an asset (like labor) in excess of what is needed to keep it in production in a competitive market

4

income distribution

How a nation's total GDP is distributed across its population. We often discuss income distributions in terms of percentiles. People with incomes in the 90th percentile have incomes higher than 90% of people in the income distribution. People with incomes in the 10th percentile have incomes that are higher than 10% of people in the income distribution.

5

capital income

income generated by an asset over time, as opposed to income earned through labor

6

labor income

earnings generated through work (labor)

7

skill-biased technological change

when a technological change like computerization produces an increase in demand for skilled workers, so that as the demand for these highly educated workers and their productivity increases, so do their wages

8

human capital

a collection of resources such as knowledge, experience, and skills that can produce economic value through labor

9

winner-take-all market

a market in which the very best performers are able to capture a very large share of the rewards, leaving the remaining competitors with very little

10

tragedy of the commons

a situation in which individuals acting independently and rationally according to their own self-interest act in ways contrary to the best interest of the community by depleting a common resource

11

cascading expenditures

a process by which household expenditures increase across the income distribution as the result of those with top incomes earning and spending more, thereby changing the consumption frame of reference for those just below the top who are int he same social circles, and then flowing down the income ladder in the same way

12

labor union

unions are organizations that represent workers in collective bargaining with employers over wages, benefits, and working conditions and int he resolution of disputes and contract violations

13

deunionization

the process of decreasing union membership within a social group, company, industry, or region

14

moral economy

an economy regulated according to principles of fairness, as opposed to a completely free, unregulated market

15

incentive

something that motivates a person to do something; something that incites a person to engage in a particular behavior

16

optimal inequality

the point at which the level of inequality incentives the greatest level of overall economic output

17

economic output

the sum of the production of each person in the economy

18

extrinsic vs. intrinsic motivation

extrinsic motivation occurs when an individual is incentivized to perform or behave in a certain way in order to earn rewards or avoid punishments. Intrinsic motivation occurs when an individual behaves a certain way because it is personally rewarding or enjoyable, for its own sake instead of out of desire for an external reward