Income Inequality Flashcards
Oxfam 2015- how much of Global Wealth was made up by the Richest 1%?
48% of Global Wealth = Richest 1%
Wealth Inequality worse than Income Inequality
OECD 2014- how Rich were the Richest 10% of OECD area compared to Poorest 10% of OECD area?
Richest 10% Income = 10x Poorest 10%
Name a popular measure for Income Inequality
Share of Income of Top 1% of earners acquire
Why did Inequality Issue gain Momentum in 2011?
Recession was due to actions of Wealthy Individuals
IRS Report for 2007- Steep rise in Top 1% of Income Share = approx. 23% of Income Share
Why was the Issue of Inequality masked Pre-Crisis?
Rising Consumption + House Prices made everyone feel Wealthier
People didn’t realise Richest were getting Wealthier at Faster rate
Why might Top 1% measure not be the best measure?
Result may change due to the fact more people file Tax Returns etc.- e.g USA 1971-1998 36%–> 47%
More people may file as ‘Single head of household’
More Young people work Part-time
New Tax Credit Schemes may be introduced
If more people File–> More enter Top 1%
What are Capital Gains?
Gains from the Sale of an Asset
e.g. Stocks sold at higher price than bought
What is the UK measure of Inequality?
Ratio between Incomes at 2 particular points in the Income Distribution- e.g. at Percentiles
2016-17 to be in UK Top 1%, you must Earn £80,700 as Single Individual or £120,500 as 2-earner Couple. What does this show?
To be in Top 1% you do not have to be ‘Super Rich’- not millionaires etc.
This Shows Inequality WITHIN Top 1%
What is an issue with Percentiles (Ratios) as a measure of Inequality?
Doesn’t look at the Distribution as a whole
What Inequality measure looks at the distribution as a whole?
GINI Coefficient
0= Perfect Equality
1= Perfect Inequality
What can give a broader perspective of Inequality?
Cross-National comparisons
Why is Inequality rising from declining incomes of Bottom groups?
Robotic Production- Increase Unemployment
Declining Manufacturing + Falling Union representation
Development has lead to Stagnant or Declining Bottom incomes
Why have Top Incomes improved?
Capital Markets- became more profitable
Saving rates declined- due to greater availability of Credit BUT most Wealthy people saved Pre-Crisis
Fall in Inheritance Taxes + Capital Gain Tax rates–> Increased Top Wealth
What is a factor that has reduced Top Incomes?
Increased Female Labour participation- Increased Family Incomes
But this is not enough to counteract effects of other negatives
