Income Inequality Flashcards
market forces
the forces of supply and demand that represent the aggregated influence of self-interested buyers and sellers on the price and quantity of goods and services offered in a market. When we discuss income inequality we are interested in how these forces play out in labor market and determine how much workers are paid for their labor.
skill-biased technological change
when a technological change like computerization produces an increase in the demand for skilled workers, so that as the demand for these highly educated workers and their productivity increases, so do their wages.
rent
economic returns on an asset (like labor) in excess of what is needed to keep it in production in a competitive market
income distribution
How a nation’s total GDP is distributed across its population. We often discuss income distributions in terms of percentiles. People with incomes in the 90th percentile have incomes higher than 90% of people in the income distribution. People with incomes in the 10th percentile have incomes that are higher than 10% of people in the income distribution.
capital income
income generated by an asset over time, as opposed to income earned through labor
labor income
earnings generated through work (labor)
skill-biased technological change
when a technological change like computerization produces an increase in demand for skilled workers, so that as the demand for these highly educated workers and their productivity increases, so do their wages
human capital
a collection of resources such as knowledge, experience, and skills that can produce economic value through labor
winner-take-all market
a market in which the very best performers are able to capture a very large share of the rewards, leaving the remaining competitors with very little
tragedy of the commons
a situation in which individuals acting independently and rationally according to their own self-interest act in ways contrary to the best interest of the community by depleting a common resource
cascading expenditures
a process by which household expenditures increase across the income distribution as the result of those with top incomes earning and spending more, thereby changing the consumption frame of reference for those just below the top who are int he same social circles, and then flowing down the income ladder in the same way
labor union
unions are organizations that represent workers in collective bargaining with employers over wages, benefits, and working conditions and int he resolution of disputes and contract violations
deunionization
the process of decreasing union membership within a social group, company, industry, or region
moral economy
an economy regulated according to principles of fairness, as opposed to a completely free, unregulated market
incentive
something that motivates a person to do something; something that incites a person to engage in a particular behavior
