Inequality Flashcards
Why is education a cause of inequality?
Workers that are highly skilled and productive have a higher MRP (marginal revenue product) and so have higher incomes. Economies with poor education systems cannot increase their productivity and incomes - remaining low skilled, low paid employment.
Different groups and countries have different ability to access education 0 some cannot afford schooling and some have poor education system.
Why is healthcare a cause of inequality?
Treatment or sickness and injuries can be expensive, which not only high portion of income, but a lack of treatment can prevent people from working and generating an income.
Different groups and countries have different abilities to access healthcare. For example, the NHS has long waiting lists.
How does corruption cause inequality?
If governments are corrupt and fail to distribute revenue that is generated through taxation, or through selling the country’s resources, then the gap between the riches and poorest widens.
How does inheritance and wealth accumulation cause inequality?
Inherited assets such as property and stocks/shares increase in value and make the individual wealthier - by doing very little. Furthermore, these assets can be used to generate additional income (rental income from property and dividends from stocks/shares.
Those without wealth to inherit, will find it difficult to grow the their income at the same rate.
How does the subsistence trap cause inequality?
A significant cause of inequality between developed and developing nations, as well as between population living in remote rural areas and urban areas.
The economy is only able to produce the basic necessities for living, with an inability to produce surplus goods and services. Without a surplus, economic development cannot occur as a surplus is required to trade and sell - to create economic prosperity.
In addition, subsistence economies often rely on all family members to produce necessities such as food and shelter. Therefore, children are unable to attend school.
Define absolute poverty.
Members of society who are unable to purchase necessities required to maintain life.
The United Nations defines absolute poverty as people who are living off less than $2.15 a day.
The amount needed to be in absolute poverty varies…
depending on the country.
Define relative poverty.
A type of poverty that is always present in an economy, it is poverty relative to other people within a particular economy.
The UK and EU measure the proportion of households on less that 60% of the median household income.
Alternatively, relatively poverty could be measured by considering what necessities people might own in order not be considered poor.
In the UK, approximately 11.7 million people live in relative poverty.
What is free-market economic system?
(causes of poverty)
The rationing function of the price mechanism excludes some consumers through high price - especially damaging when this is healthcare, education or food.
How does unemployment cause poverty?
Without a job, income are low. In some countries, where no government support is available, incomes may even be zero
How does education & training reduce poverty?
Those that are higher skilled, are more likely to have a job and more likely to have a higher income. Therefore, can afford basic necessities.
How does a lack of healthcare cause poverty?
People who get sick are unable to work, cannot earn an income and their family may rely upon them to survive. If healthcare is not government funded (like the UK’s NHS), then it may take up a large portion of income or is completely inaccessible.
How does inheritance cause poverty?
People who are born into poor families have a disproportionate chance of being poor themselves. This is called the ‘cycle of poverty’. Somebody born into a poor family, even in a rich country, is less likely to earn a high wage and more likely to suffer from health problems.
How does a lack of social infrastructure and capital cause poverty?
Services and items which support the whole of society. An economy without hospitals, roads, schools, transport links and housing is far more likely to experience high levels of poverty. Social infrastructure and housing creates jobs and helps allocate necessities.
What is capitalism?
When factors of production (land, labour and capital) are owned by private individuals.
