7: Definitions Flashcards
Absolute poverty
When a person doesn’t have enough income to fulfil basic needs.
Distribution of income and wealth
The way in which total income are wealth are divided among the population of the economy.
Earning trap
Situations where the more an individual earns, the less they are entitled to, making it harder to escape poverty.
Equity
Fairness, Justness. Involves value judgement.
Fiscal drag
As wages rise, a higher proportion of income is paid in tax.
Gini coefficient
Measures income and wealth inequity. Maximum inequality is 1.
Horizontal Equity
People in identical circumstances are treated equally.
Hysteresis
Effects that persist even after the initial causes giving rise to the effects are removed.
Inequity
Unfairness, unjustness. Involves value judgement.
Kuznets hypothesis
Theory that as an economy grows, inequality is initially increased then decreased.
Lorenz curve
Can be used to illustrate and measure distributive inequalities.
Means-tested benefits.
Entitlement to certain benefits depends on whether the income or wealth of an individual is below a certain level.
Poverty trap
Where a rise in income leads to a decrease in eligibility in benefits, forcing individuals deeper into poverty.
Vertical equity
People in different circumstances are treated unequally yet fairly.
