ECON 4 Wealth & Inequality Flashcards
what is equity
the quality of being fair or equal
3 causes of inequality
earned income (race, age, gender etc)government policycompetition
4 types of wealth
physical (antiques etc)propertyprivate pension wealthfinancial
key cause in inequality for wealth
inheritance
formula for gini coeffecient
a/(a+b) *100
value for absolute poverty
less than $1.90
relative income figure
less than 60% median income
3 causes of poverty
lack of human capitaldependencyinfrastructure
what is the poverty cycle
concept that poverty causes poverty
what is horizontal equity
equal treatment of people in the same situation (regardless of age race gender etc)
What is vertical equity
different treatment of indivuduals to promote equity (e.g. progressive taxes)
3 types of taxation
progressive regressivepropotional
6 policies to reduce inequality
Minimum/maximum wagesForced benefits to workersEqual pay legislationTrade unionsPrice controls on necessitiesGoods provided on an income basis
key disadvantage of taxation
lowers incentive to work
Trickle down effect
high wealth in individuals creates jobs
6 development classifications
incomedeveloped, developing, less developedworlds modelNICsBRICsTiger economies
what are the tiger economices
South Korea, Singapore, Taiwan
Why doesn’t growth correlate with development?
other factors can influence, inequlity, corruption, lack of social mobility
three variables of HDI
GNI pc at PPPeducation - mean years life expectancy at birth
What is a hard commodity?
Something that is mined or extracted
What is a soft commodity
something that is grown or raised
why are commodity prices so volatile
very inelastic demand and supply, which mean small changes cause big changes in price
What is the prebisch singer hypothesis
Over the long term, as commodities don’t rise in value as much as technology and other processed materials, the terms of trade of countries with primary product dependency deteriorates
What is the IHDI
Inequality-adjusted HDI(uses atkinson index)
How many indicators does the genuine progress indicator have and what are the three categories of these
26Social, economic, environmental
What is the MPI
Multidimensional poverty index 10 indicators
What is the resource curse
Countries have an abundance of natural resources but do not develop
Why do primary product dependent countries struggle with prices
very volatilemakes planning and investment difficult
what is dutch disease
Country becomes a significant exporter of a resource in short space of time, which appreciates exchange rate, eroding competitiveness
What is the harrod-domar model
change in Y/Y=s/ks is savings ratiok is capital output ratio
What is the savings cycle
low savingslow investmentlow capital accumulationlow incomes
What is the savings gap
the difference between actual savings and the savings needed to finance investment for higher growth
What is a foreign exchange gap
difference between exports and the exports needed to finance higher growth
What is capital flight
Money is sent abroad to be saved
What is the Malthusian trap
Population grows before agricultural growth, results in inadequate food–> can be extended to energy
What is microfinance
very small loans given to poor groups to allow them to invest
What is often a missing market in developing countries
absence of a financial sector
what does the kuznets curve show
Level of envronmental degradation and the industrialisation of a nation
What can lead to underemployment
Over-education can lead to underemployment
what is a brain drain
better educated memebers of the workforce leave to countries with better opportunities
What is rent seeking
behaviour which attempts to increase share of existing pot of wealth rather than creating higher income/wealth
What is dead capital
Poorer people not being able to use their assets (like land) as collateral for loans
