DISTRIBUTION OF INCOME/WEALTH AND POVERTY - TYPES AND CAUSES of poverty Flashcards
what is one of the bigggest criticism about the labour market
2 points
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
what are the two ways of defining poverty
absolute
relative
what is absolute poverty
3 points
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
absolute poverty is more relevant to why type of country
2 marks
developing - but can apply to developed antions aso
what is relative poverty
Incomes earned by a hh is les than a given average or median in society
relative poverty is more concerned to which type of coutnry
developed - but not confined to developed and can be applied to develpoing countries
fundamental concept of inequality , poverty , distribution f wealth etc
equity v equality
what is equity + example
fairness in distribution of income e.g neurosurgeon paid more than bartender
cause job is more stress and requires more skills and education
what is equality
equal distribution of income
everyone has the same income and is treated the same
what is horizontal equity + examples
equal treatment of equals
i.e if got 2 inid earning same income they will be taxed exactly the same
what is vertical equity + example
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
what are the 7 causes of Poverty
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
recession creates what type of unemployment
cyclical
the msmatch of skills if
tructural unemployment
explain how cyclical unemployment can be a significant source of poverty
3 points to make gworlie
In recession where there’s lack of AD in econ
lots of workers may lose jobs and incomes which
Creates significant source of poverty
the UK econ has undergone a significant restructuring since the 1970s
explain this in trms of pvoerty
5 marks
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
whats the probkem with structural unemployment
may create long term unemployment
explain how structura unemployment can create long term unemployment
2 points
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
unemployment is horrible but especially when
the natuere of it is structural and LT
explain how POOR EDUCATION AND SKILLS can create poverty
2 points
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
Explain how POOR HEALTH AND HEALTHCARE can create poverty
2 points
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
explain how WAGE differentials can create poverty
2 points
The bigger the wage diff between high and low paid professions th greater relative poverty is likely to be
expklain how being born into poverty/into a single parent household can create poverty
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
explain how tax custs for the well of creates poverty
5 points +mention UK tax history
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
