LA_Today_Inequality_and_Redistribution (2) Flashcards
(94 cards)
What explains the inequality divergence between the Global South and the Global North?
Institutional causes and redistribution systems are major factors
Redistribution systems, such as taxes and transfers, drive inequality divergence, while property and market access are secondary.
What is the Gini coefficient?
A measure of inequality within a distribution, ranging from 0 (perfect equality) to 1 (perfect inequality)
The Gini coefficient is often used to gauge income or wealth distribution.
What percentage of total excess inequality does Latin America have compared to countries of equal income?
30% total excess inequality
This is equivalent to 10 Gini points more compared to countries of equal income.
What are the two main factors contributing to inequality divergence?
- Redistribution systems (taxes and transfers)
- Property and market access
Redistribution systems are the primary driver, while property and market access play a secondary role.
True or False: The Global South has a fiscal welfare state that reduces inequality.
False
The Global South missed the emergence of a fiscal welfare state that reduced inequality in the North during the 20th century.
What type of institutions does the Global South predominantly have?
Extractive institutions
These institutions restrict property access and limit growth.
What is a key characteristic of the early institutional thesis?
Elites use the state to extract resources from citizens
This is a foundational concept in understanding the dynamics of inequality.
What is the main driver of inequality according to the lecture’s findings?
Redistribution systems
Taxes and transfers are crucial in determining levels of inequality.
Fill in the blank: The Global South has _______ less redistribution compared to countries of equal income.
two times
For example, Chile redistributes 12% compared to 27% in Romania.
What is the relationship between pre-redistribution factors and redistribution?
They have distinct political economies
This means that the political dynamics governing each are different.
What does the term ‘elite extraction’ refer to?
The process by which elites use state mechanisms to extract resources from the population
This is a core mechanism of inequality.
What is one of the limits of the institutionalist consensus?
Oversimplified causality
This can lead to inaccurate conclusions about the historical causes of inequality.
What is the significance of Gini coefficients before and after taxes and transfers?
They indicate the level of inequality in different contexts
Gini before taxes shows market inequality, while Gini after reflects the impact of redistribution.
What percentage of inequality does Latin America exhibit due to market factors?
Approx. 10% excess market inequality
This indicates a 3 Gini points excess before taxes and transfers.
What is the outcome of failed state capacity in relation to inequality?
Limits effective taxation and public goods provision
This leads to lower levels of redistribution and higher inequality.
True or False: Historical data is irrelevant for understanding current inequality patterns.
False
Historical data helps trace the evolution of inequality from colonial times to the present.
What is the goal of building executive checks in governance?
To limit extraction and ensure effective public spending
This is aimed at reducing corruption and enhancing state capacity.
What role do omitted channels like state capacity and education play in inequality?
They are critical factors that influence the level and distribution of inequality
Ignoring these factors can lead to incomplete analyses of inequality.
What do the new data contributions aim to achieve?
To identify causes and timing of inequality divergence
This includes modern and historical data to disentangle mechanisms.
What is the Gini Coefficient?
A measure of income inequality within a population
Which country has the highest Gini Coefficient according to the data?
South Africa
What percentage represents the Gini Coefficient in Brazil (pre-tax & transfers)?
39%
What is the OECD average Gini Coefficient (pre-tax & transfers)?
35%
What is the Gini reduction percentage (after tax & transfers) in Nordic Countries?
40%