Income Inequality Distribution

Question 1

What is income inequality distribution?

Answer 1

Income inequality refers to how unevenly income is distributed throughout a population.

Question 2

What is the Gini coefficient?

Answer 2

A numerical measure of the degree of inequality involved in any income distribution of a country.

Question 3

What is the Lorenz Curve

Answer 3

A graphical representation of the inequality of a nation’s income distribution.

Question 4

Costs of inequality

Answer 4

• Division into social classes
• Most likely to experience homelessness, drug dependency, domestic violence, health problem, illiteracy, unemployment and low education, social isolation and loneliness
• Less income available and less spending in the circular flow

Question 5

Benefits of inequality

Answer 5

• Opportunity for greater rewards for developing skills, added responsibility, working longer hours are incentives to achieve more
• Result in more efficient allocation of resources, increased competitiveness and economic growth, overall increasing living standards
• Incentive for workers to improve skills
• Encourage entrepreneurs to take risks
• Higher income earners save money – leading to more investment
• Increase technology from investment