4.2.2 - Inequality Flashcards
What is the distinction between wealth and income inequality ?
Wealth inequality : The unequal distribution of assets across the population.
Income inequality : The unequal distribution of income across the population.
How can we measure inequality ?
- Using the Lorenzo curve and from there we can calculate the Gini Coefficient.
Draw a lorenzo curve diagram
- 45 degrees line shows perfect equality - everyone earns the same income (this would remove the incentive for work)
- The further the curve lies blow the line of perfect equality, the more inequality will exist.
Explain and draw how the lorenzo curve would look like as the line gets closer to equality.
How is the Gini coefficient calculated form the lorenzo curve ?
What does the Gini coefficient value tell us ?
0 = Absolute equality (socialism)
1 represent perfect inequality. ( one person has all the income)
Stats of the Gini coefficient
In 2022, the USA coefficient was .41 as compared with the UK value of .35
The distribution of income in the UK was more equitable than in the USA
Causes of income and wealth inequality
(It’s better to do an essay in this, but blurt all the ones you know) and also here are some links
Link%20Inequality.pdf)
Tutor to you has it nicely summarised Link
Note you need to talk about 4 things
- Income inequality within a country
- Income inequality between countries
- Weath inequality within a country
- Wealth inequality between countries - Second link is the best btw !!!
How does the Kuznets curve explain the impact of economic change and development on inequality ?
As a country changes sectors from primary (farming) to secondary (manufacturing), productivity increases and the per capita income increases
However, inequality is also increasing as the gap in wages between the primary and secondary sector is significant
