Distribution of income and wealth, poverty and inequality Flashcards
Absolute poverty
When a person doesn’t have enough
income to fulfil basic needs
Distribution of income and wealth
How total income and
wealth is divided among the population of the economy
Earnings trap
Situations where the more an individual earns, the less they are entitled to, making it hard to escape poverty
Equity
Fairness, justness. Involves value
judgements
Fiscal drag
As wages rise, a higher proportion of
income is paid in tax
Gini coefficient
Measures income or wealth inequality; 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
Kuznets hypothesis
Theory that as an economy grows,
inequality is initially increased, then
decreased
Lorenz curve
It 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 for benefits, forcing individuals deeper into poverty
Vertical equity
People in different circumstances are
treated unequally, yet fairly
