Distribution of Income and Wealth: Concepts Flashcards
The richest 20% of Australians earn ___ times more than the poorest 20%
6 times more
The wealthiest 20% of Australians own ___ times more than the poorest 20%
64 times more
The 2 biggest sources of income in Australia are:
1) Wages
2) Government welfare
The 2 biggest sources of wealth in Australia are:
1) Owning own home
2) Superannuation
How does Australia’s Gini coefficient for income compare to the rest of the world?
It is similar to the OECD average
How does Australia’s Gini coefficient for wealth compare to the rest of the world?
It is below the OECD average
To what extent have government policies reduced income inequality in the Australian economy?
The Gini coefficient has been steady around 0.32 for the past decade
According to the Productivity Commission, it would be 0.45 if it wasn’t for the progressive tax system and transfer payments (welfare)
How has the Australian Government changed marginal tax rates recently?
The revised ‘Stage 3’ tax cuts reduce the lowest two marginal tax rates and increase the threshold for the highest two brackets.
They give an average 2% cut in total tax for all taxpayers, and have a negligible impact on inequality.
The original Stage 3 tax cuts would have made the income tax system much less progressive, by reducing the average rate of tax of a high-income earner by 6 times more than the reduction for someone on the median Australian income.
What has the government done recently that would reduce income inequality in Australia?
1) Doubled the rate of Jobseeker (only during 2020) and provided additional cash payments to those on welfare
2) The ‘low and middle income tax offset’ reduced tax for those on lower incomes
Both of these were only TEMPORARY during the pandemic
What is the pay gap between men and women?
Full-time female workers earn 87% of full-time male workers
What is the pay gap between different family structures?
A person in a couple without children earns 45% more than a single parent
What is the pay gap between different ethnic backgrounds?
Earn around $8,000 less per year than Australian-born workers
What is the pay gap between different occupations?
Managers and professionals earn around double that of sales workers and machinery operators
What is the pay gap between different age groups?
21-34 year olds earn around 35% less than the average adult income
Why has wealth inequality in Australia been widening?
1) Rapid growth in house prices (around 20% per year), mostly due to low interest rates
2) High ToT and expansionary monetary policy has increased the value of shares