Chapter 9 The Distribution Of Income And Wealth Flashcards
Marketable wealth
Wealth that can be transferred to others
Wealth
A stock of valuable assets
Non marketable wealth
Wealth specific to a person, which cannot be transferred
Distribution of wealth
How wealth is shared out between be population
Sources of wealth
Inheritance
Savings
Entrepreneurship
Chance
The causes of wealth inequality
Inheritance
Marriage
Income inequality
Chance
Income
A flow of money to a factor of production. An individual’s income may include wages and state benefits.
Distribution of income
How income is shared out been the factors of production.
Lorenz curve
A diagrammatic representation of the distribution of income and wealth
Gin coefficient
A statistical measure of degree of inequality of income or wealth
Causes of income equality
Impact of the state Wealth inequality Household competition Level of skills and qualifications Difference in earnings
Absolute poverty
When an individual or households income is insufficient for them to afford basic shelter, food or clothing
Relative poverty
When people are poor in comparison to others in society
What is used to measure poverty
Poverty audit
Causes of poverty
Unemployement Low wage Sickness and disability Old age The poverty trap Imperfect information
Poverty trap
When individuals or households are no better off following a pay increase because tax paid increases and benefits are withdrawn.
Policies used to tackle poverty
A national minimum wage Cutting the bottom date of income taxes Tackling unemployment Training and education Exploiting trackless down effects Increasing benefits Tax credits
Vuluntary unemployment
When a worker chooses not to accept a job at the going wage rate
Equity
Is about social justice and fairness, distribution goals. It requires that there is a fair distribution of welfare, that is a fair distribution of the economy’ gds + s’s
Minimum wage
A minimum wage is a price floor - employers cannot legally undercut the current minimum wage rate per hour
Vertical equity
Different treatment of people with different characteristics to promote greater equity
Horizontal equity
Implies we give the same treatment to different people in an identical situation.
