Inequality and justice

Question 1

What is the Gini Coefficient?

Answer 1

Measures how unequal income is distributed in a country
Values 0-1, 0 = perfect equality

Question 2

How to work out the Gini Coefficient?

Answer 2

A / (A+B)
A - area between the perfect equality line and lorenz curve
B - area under the lorenz curve

Question 3

Why is it difficult to measure inequality?

Answer 3

Has to be estimated, Based on household survey
- ‘ Missing rich’ unreported

Question 4

What is wealth inequality

Answer 4

Weath = net worth (assets - liabilities)
it is more unequally distributed than income

Question 5

What is inequality of opportunity?

Answer 5

Due to circumstances beyond ones control, lack resources to develop talent

Question 6

The Great Gatsby Curve

Answer 6

Shows that more unequal countries have less social mobility
Strong positive correlation between the wealth of 1 generation and the capability to move up to the next generation

Question 7

What is Social mobility?

Answer 7

Ability to move up or down in social hierarchy
- better to be high as it matters about ability rather than background. More equal

Question 8

Reasons for differences in population share between men and women?

Answer 8

• Birth (South and East Asia, have less female ratio)
• Death - men have higher mortality rates
• Migration - in the middle east there’s more male immigration

Question 9

Why do women usually earn less than men and what can this be called?

Answer 9

They usually opt for more low-skilled, low-paid jobs. More flexible for family life
MOTHERHOOD penalty

Question 10

Causes for inequality

Answer 10

• Different education, experience and skill
• Globalisation (outsourcing, low wage competition)
• Tech changes
• Tax and benefit system (regressive vs progressive)
• Discrimination and structural issues

Question 11

Progressive tax

Answer 11

marginal tax rate increases when income increases
- e.g income tax

Question 12

Proportional tax

Answer 12

marginal rate tax is constant
- e.g national insurance contribution

Question 13

Regressive tax

Answer 13

marginal rate tax falls as income increases
- e.g Excise duties on tobacco and alcohol

Question 14

Policies to reduce inequality

Answer 14

• Progressive tax
• Welfare transfers
• Minimum wage
• Education + training

Question 15

What is welfare transfers

Answer 15

Payment from the governemeny without requiring repayment or g/s in return
- e.g conditional cash transfer (CCT) - social welfare money in exchange for them meeting conditions (sending kid to school, or medical)

Question 16

Reason why wealth inequality persists over time

Answer 16

• Inheritance (wealth harder to build)
• Asset value appreciation
• Wealth generated income
• Tax system
• Less progressive capital gains