DISTRIBUTION OF INCOME/WEALTH AND POVERTY - Reasons for Income & Wealth Inequality Flashcards
Define Income
a flow concept measured over a given period of time
Define Wealth
a stock concept, measured at a given point in time
what statemtn can anyone make about their wealth
at this point in time i have x amount of wealth
what does assets constitute
wealth
what are assets
anything with a market value that can also generate income
assets can be
bought and sold
give examples of assets
pensions , stocks , shares , houses , gov bonds , gold
when you buy assets you are adding to your
wealth
what is the term used to describe the relationship between wealth and income
mutually reinforcing
wealth and income being mutually reinforicng means they are
linked to each other
explain how wealth and income and mutually reinforcing
3 marks
With high incomes any surplus income you have can be used to purchase assets
Assets generate more income and then surplus income can be used to purchase assets
and generate a cycle of further income and assets
if youre wealthy the chances are you have a
relativley high income
if you have a high income the chances are you are
relativley wealthy
explian the relationship betwen wealth and income simply
High income - assets - incomes - assets
State the 5 REASONS FOR DIFFERENTIALS IN INCOME AND WEALTH (and unequal distribution)
AGE
EDUCATION
OWNERSHIP OF (FINANCIAL) ASSETS
OWNERSHIP OF PROPERTY (to rent or for yourself)
WAGE DIFFERENTIALS
Explain why age can cause differentials in income and wealth
4 marks
The older someone is the greater their earning potential
as got more skills, their more productive and xp is greater
so can demand high wages
therefore their wealth accumulation can be greater as well
true or false education can be a key driver of changes in the distribution of income
true
explain why educaiton can casue diffrentials in income
2 marks + a stat
The more qualifications someone has e.g GCSES A LEVELS, DEGREES
the greater the earning potential of that individual is likely to be compared to those that dont - leading to diff in income
e.g stats proves those that go to uni earn more than those who dont on avg
explain how ownership of financial assets can casue differentials in income - is it not wealth
3 marks
Those able to purchase e.g financial asest suchas s pensions and shares
, more better off as can get income from them leading to unequal distribution of wealth -
as are able to use this income to purchase more asets and generate further income - leading to unequal distribution of income
explain the role of the employer in how ownerrship of financial assets can cause differentuals in income - i think wealth
the stronger the employer the more likely the employer is going to give access to really good pensions schemes and make distribution of wealth worse
as pay less tax
what are the two reasons of ownership of property
for individuasl living purposes
an investment to fenrate income from
explaijn how ownerrship of property can cause differentials in wealth
Get wealthy over time as prices go up and up leading to a big divide in DOW compared to those who cant afford property
why is distribution of wealth worse overtime with ownership of property and financial assets
these are inherited as people pass away they give these 2 their kids so kids inherit massive wealth so
OT DOW gets worse and cause assets gen income so does ditribution of income get worse
in terms of wage differentials why are labour mkts not considered perfect
there are differences between wages in different professions
