4.2 - Poverty and inequality Flashcards
Absolute poverty
4.2.1 - Absolute and relative poverty
Those people who do not have adequate nutritional intake per day, or do not have adequate shelter or clothing in order to survive. The World Bank reports the number of people in countries below a $2.15 a day adjusted for purchasing power parity (PPP)
Deprivation
4.2.1 - Absolute and relative poverty
Deprivation takes into account whether people access to things essential for a basic standard of living. These include clean drinking water, electricity, clean fuel for cooking, education, toilet facilites, basic transport and communication, basic income and wealth (measured by whether a household belongs to the poorest 20%)
Earnings
4.2.1 - Absolute and relative poverty
Earnings are made up of wages plus overtime pay, bonuses and comission
Economic rent
4.2.1 - Absolute and relative poverty
Any amount earned by a factor of production, such as labour, above the minimum amount they require to work in a current occupation
Economically inactive population
4.2.1 - Absolute and relative poverty
Those who are of working age but are neither in work nor actively seeking paid work
Effective marginal tax rate
4.2.1 - Absolute and relative poverty
The effective marginal tax rate is the tax rate on each extra £1 of income - it takes into account the impact of direct taxes (such as income tax) but also the possible withdrawal of means-tested welfare benefits if people take a paid job. A high effective marginal tax rate is a root cause of the unemployment trap, it creates disincentives to find work
Efficiency wage
4.2.1 - Absolute and relative poverty
A theory that suggests it may benefit firms to pay workers a wage higher than thier marginal revenue product. Paying a higher wage improves worker morale and can lead to a high quality of people applying for new jobs as they become available
Extreme poverty line
4.2.1 - Absolute and relative poverty
Revised in 2015, the World Bank now measures the scale of extreme poverty as the percentage of a country’s population living on less than $2.15 a day ajusted for purchasing power parity
Poverty
4.2.1 - Absolute and relative poverty
There is no single definition of poverty. Poverty has several aspects including:
- Material conditions: needing goods and services, multiple devprivation, or a low standard of living
- Economic position: low income, inequality or low social class
- Social position of the poor, through lack of entitlement, dependency or social exclusion
Poverty Line
4.2.1 - Absolute and relative poverty
An income level that is considered minimally sufficient to sustain a family in terms of food, housing, clothing, medical needs, and so on
Poverty trap
4.2.1 - Absolute and relative poverty
A situation in which there is little incentive for workers in low-paid jobs to earn extra income, because it wouldl result in having to either pay higher direct tax and/or losing some of their welfare benefit payments
Relative povety
4.2.1 - Absolute and relative poverty
The relative position of some economic unit (e.g. individual, household, racial group) compared to another economic unit. A person can be relatively poor but not absolutely poor - is really to do with distribution of income in a country
Transfer earnings
4.2.1 - Absolute and relative poverty
The minimum reward required to keep factors of production, such as labour, in its current occuaption
Unemployment trap
4.2.1 - Absolute and relative poverty
A situation in which there is little financial incentive for somone who is unemployed to start working because the combined loss of welfare benfits and need to pay off income tax and other direct taxes might result in them being worse off
Wealth
4.2.1 - Absolute and relative poverty
The value of assets owned by a household. Assets can include property, shares and savings and marketable wealth such as antiques and other rare items
Wealth inequality
4.2.1 - Absolute and relative poverty
The degree to which wealth is distributed unequally across a population; inequality can be shown a Lorenz Curve and measured using the Gini coefficient
Capitalism
4.2.2 - Inequality
An economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state
Compensating (wage) differentials
4.2.2 - Inequality
Higher pay may be earned for relatively low skilled jobs if working conditions are unsociable, unpleasant or dangerous, whereas lower pay may be earned for higher skilled jobs if the working conditions are nice, flexible and safe
Demographic change
4.2.2 - Inequality
Any change in the population, for example in terms of average age, dependency ratios, life expectancy, family structures, birth rates etc.
Dependency ratio
4.2.2 - Inequality
The (age) dependency ratio is the ratio of dependents (i.e. people younger than 16 or older than 65) to the working-age population
Discrimination
4.2.2 - Inequality
The different treatment of people as a result of factors such as age, gender, race, sexual orientation, ethnicity
Gini Coefficient
4.2.2 - Inequality
The Gini coefficient measures the extent to which the distribution of income (or, in some cases, consumption expenditures) among individuals or households within an economy deviates from a perfectly equal distribution. The coefficent rages from 0 - meaning perfcet equality - to 1 - meaning compelete inequality
Incentive scheme
4.2.2 - Inequality
A motivational scheme for employees, designed to encourage increaseed productivity/efficiency/working to the company objectives. Examples could include share schemes, bonuses, comission on sales, additional holiday, company car and formal awards
Income distribution
4.2.2 - Inequality
Income distribution is how income is divided up among all the citizens in a country. The most common measure of income distribution is the Gini Coefficent
Living wage
4.2.2 - Inequality
A wage that provides enough money for a working person to live decently and provide for their family. That wage rate is estimed to be £12 per hour for across the UK but in London it is £13.15 per hour
Lorenz curve
4.2.2 - Inequality
The Lorenz Curve shows the degree of income inequality in a given economy or population. The further away the Lorenz curve from the line of absolute equality (the 45° line), the greater the degree of income inequality. Lorenz curves can also be used to illustrate wealth inequality
Maximum wage
4.2.2 - Inequality
A wage that is set below the equilibrium wage rate. In theory, the outcome would be an excess demadn for labour, or a labour shortage
Minimum wage
4.2.2 - Inequality
A wage that is set above the equilibrium wage rate. In theory, the outcome would be an excess supply of labour, or unemployment, known as the National Living Wage in the UK since 2016
National Living Wage
4.2.2 - Inequality
The formal name for the minimum wage in the UK since 2016
Nominal wages
4.2.2 - Inequality
Also known as “money wages”; the actual hourly rate of pay - it is not adjusted for inflation
Social cohesion
4.2.2 - Inequality
Similar to social capital, social cohesion is about how united, connected, trustful, cooperative and tolerant of cultural diversity society is
Social exclusion
4.2.2 - Inequality
Social exclusion occurs when people are deneid access to goods opportunites are considered ‘normal’ in a society
Universal Credit
4.2.2 - Inequality
A new type of single monthly benefit designed to replace 6 separate benefits for people who are on low income or out of work. It replaces the following benefits
* Income-based Jobseejers Allowance (JSA)
* Income Support
* Child Tax Credit
* Working Tax Credit
* Housing Benefit
Wage differentials
4.2.2 - Inequality
The difference in wages between workers. The term can refer to differences in wages between differently skilled workers in the same industry, or similar-skilled workers in different industries
Zero hours contracts
4.2.2 - Inequality
Zero Hours Contracts do not guarantee a minimum number of working hours each week. In the UK labour market, People on “zero-hours contracts” are more likely to be young, part time, women, or in full time education when compared with other people in employment