DISTRIBUTION OF INCOME/WEALTH AND POVERTY - TYPES AND CAUSES of poverty

Question 1

what is one of the bigggest criticism about the labour market

2 points

Answer 1

end result could be significant income inequality and poverty

Many would say these outcomes are unfair and in itself those outcomes are sources of labou mkt failure

Question 2

what are the two ways of defining poverty

Answer 2

absolute

relative

Question 3

what is absolute poverty
3 points

Answer 3

When incomes earned are below a certain threshold

whereby individuals and families cant access the basic life sustaining goods and services

such as food water and shelter

Question 4

absolute poverty is more relevant to why type of country

2 marks

Answer 4

developing - but can apply to developed antions aso

Question 5

what is relative poverty

Answer 5

Incomes earned by a hh is les than a given average or median in society

Question 6

relative poverty is more concerned to which type of coutnry

Answer 6

developed - but not confined to developed and can be applied to develpoing countries

Question 7

fundamental concept of inequality , poverty , distribution f wealth etc

Answer 7

equity v equality

Question 8

what is equity + example

Answer 8

fairness in distribution of income e.g neurosurgeon paid more than bartender

cause job is more stress and requires more skills and education

Question 9

what is equality

Answer 9

equal distribution of income

everyone has the same income and is treated the same

Question 10

what is horizontal equity + examples

Answer 10

equal treatment of equals

i.e if got 2 inid earning same income they will be taxed exactly the same

Question 11

what is vertical equity + example

Answer 11

higher income earners in society have to pay teh highest tax rates but those on lower Y pay lower tax rates

E.g progressive and proportionate tax systems tax rich more than poor

Question 12

what are the 7 causes of Poverty

Answer 12

UNEMPLOYMENT

POOR EDUCATION/SKILLS

POOR HEALTH / HEALTH CARE

WAGE DIFFERENTIALS

BORN INTO POVERTY / SINGLE PARENT HH (Bad luck)

TAX CUTS FOR THE WELL OFF

SUBSITENCE AGRICULTURE

Question 13

recession creates what type of unemployment

Answer 13

cyclical

Question 14

the msmatch of skills if

Answer 14

tructural unemployment

Question 15

explain how cyclical unemployment can be a significant source of poverty

3 points to make gworlie

Answer 15

In recession where there’s lack of AD in econ

lots of workers may lose jobs and incomes which

Creates significant source of poverty

Question 16

the UK econ has undergone a significant restructuring since the 1970s

explain this in trms of pvoerty

5 marks

Answer 16

moved away from heavy industry and manufacturing related industry

to more service sector industry and growth

So those who use to work in manufacturing industry may not have transferable skills to take service sector jobs

so as loose jobs in manufactoring related industries and may not be able to acces other jobs in econ

therefore they’ll be unemployed, loose incomes and maybe go into poverty

Question 17

whats the probkem with structural unemployment

Answer 17

may create long term unemployment

Question 18

explain how structura unemployment can create long term unemployment

2 points

Answer 18

if theres no training of workes and no way of workers getting skills needed to take available jobs in society they may be unemployed for long period of time

Hysteresis argument becomes strong here and they remain trapped in poverty

Question 19

unemployment is horrible but especially when

Answer 19

the natuere of it is structural and LT

Question 20

explain how POOR EDUCATION AND SKILLS can create poverty
2 points

Answer 20

Those that lack qualifications may not have MRP high enough to access jobs in econ

which ,is heart of problem which if not solved, can lead to lots and LT poverty in society

Question 21

Explain how POOR HEALTH AND HEALTHCARE can create poverty

2 points

Answer 21

Can limit productivity and earning potential because poor health limits the amount people work and the kind of jobs they can work in

so causes an onset of low productivity , low wages and thus poverty traps

Question 22

explain how WAGE differentials can create poverty

2 points

Answer 22

The bigger the wage diff between high and low paid professions th greater relative poverty is likely to be

Question 23

expklain how being born into poverty/into a single parent household can create poverty

Answer 23

Evidence prives if raisedby single parent youre earning potential likely to be lower + single parents earn less income compared to two parent hh

Being born into poverty means you may struggle to access higher paid professions so more likely t be living in poverty

Question 24

explain how tax custs for the well of creates poverty

5 points +mention UK tax history

Answer 24

Seen in uk over last 15 years
The higher ncome tax bracket has come down to stand at around 40% for those earning 150 k + - lower than previously

This means those earning such high incomes get automatic benefit and boost to incomes which increases the divide

as can put surplus income into assets which will generate income hten a cycle of gaining more income and assets etc increasin relative poverty in society