ch 20 Flashcards
define gini coefficient
measure of inequality that calculates how much actual income distribution deviates from perfect equality
define R factor
redistribution factor
% difference between Gini coefficient based on market income and Gini from after tax/transfer incoen
what is the poverty line
line that classifies households below it as poor based on income
define poverty rate
% of population with family income below poverty line
LICO income measurement acronym
low income cut off
define LICO income measurement
only in canada
when people spend 20% above average % of income on necesities
problems with LICO
not adjusted for inflation since 1992
inaccurate for poverty (ex. own a house but retired, no income)
LIM acronym
low income measure
define LIM income measurement
used internationally
poverty threshold is 50% of median income
define median
the middle number in an ascending/descending list
problem with LIM and LICO
both relative
better for measuring income inequality rather than poverty
MBM acronym
market basket measure
define market basket measure
income measure
official canada poverty line
based on cost for basic needs for diff sized families
define proposed absolute absolute measure
income measure
try to measure costs of basic needs
hard to define
define in kind transfer
low income household receives non monetary assistance
hard to value
define economic life cycle
standard of living depends on place in income life cycle
(just entering work force vs retired)
define transitory income
temp. unexpected change in income that is not expected to continue in the future
define economic mobility
movement between income categories through lifetime
define inter generational mobility
persistence of economic success through generations
calculation of generational elasticity of earnings
%change in sons earnings/%change in dads earnings
NOT WOMEN
define utilitarianism
max total utility
redistribute based on diminishing marginal utility
weakness of utilitarianism
incentivizes everyone to work less hard and get govt handouts
define diminishing marginal utility
one extra dollar gives less utility to rich person than poor person
makes less of an impact
define liberalism/leftism
want to maximize minimum utility
beforelife
kind of social insurance
define maximin criterion
want to maximize utility of worse off person in society
who made liberalism
john rawls
who made utilitarianism
jeremy bentham
john mills
define libertarianism
want equal opportunities, not equality of outcomes
govt should prevent theft etc but not redistribute income
who made libertarianism
robert nozick
define welfare
supplemental income for low earning households
reduce incentive to work
help families with kids, disabled, can’t work
pros of minimum wage laws
employees benefit from higher wages
some think demand for unskilled labour is inelastic
cons of minimum wage laws
higher unemployment in low skill
workers critics argue labour demand is elastic long term
what is universal basic minimum income
if you earn under a certain amount h get tax subsidies
don’t pay taxes
pros of in kind transfers
better than having money for drugs
cons of in kind transfers
disrespectful and hard to know what ppl need most
define employment insurance
you pay and get relief when you lose your job and it wasn’t your fault
