5- Inequality Flashcards
1
Q
Causes of inequality
A
- Differences in wages
- Differences in wealth
- Age: those in the peak of their careers more
2
Q
The Kuznets hypothesis
A
The Kuznets hypothesis says that as society develops and moves from agriculture to industry, inequality increases as the wages of industrial workers rises faster than farmers.
3
Q
How is income redistrubted?
A
Taxation and gov spending
4
Q
Absolute poverty
A
When people are unable to afford sufficient necessities to maintain life
5
Q
Relative poverty
A
When income falls below an average income threshold. In the UK, this is those on less than 60% of median household income.
6
Q
Policies to promote income equality
A
- Increase progressive taxes, reduce regressive taxes (LOWER INCENTIVE)
- Increase benefits (POVERTY TRAP)
- Min/max wages
- Gov spending on healthcare/education (COST/TIME LAG)
- Legislation (hiring/firing) (COSTLY/ENFORCEMENT)
7
Q
Evaluation of policies to reduce income inequality
A
- Cost
- Equity vs efficiency
- Normative
- Gov failure
