LC3 - inequality

Question 1

1. Please explain briefly, why intra-household inequality may be a source of bias in survey-based estimates of inequality and state if the bias is positive or negative.

Answer 1

Ravallion (2020)
The intra household inequality refers to unevenly distribution of income and ressources within the same household. This may occur due to differences in age, gender or roles between them. For example if more ressources are consistently allocated to male members over female, or adults over children, the actual economic welfare of the household is underestimated.

Therefore when household surveys assume that all ressources are evenly distributed between the members, they end up missing these disparities.

Bias type: Positive. The assumption of equal distribution leads to a positive bias, underestimating true inequality levels within a community or a country.

Question 2

2. Please explain how it is possible to argue that:
3. Global inequality has increased from around 1980 to around 2000.
4. Global inequality has decreased from around 1980 to around 2000
5. Global inequality has been roughly constant from around 1980 to around 2000

Answer 2

LINKED TO MILLANOVIC cross-country concept

1. This viewpoint can be supported by the data that has shown that wealth has increased significantly the past decades, where the richest gets richer, while the lower-income countries have slower growth rate.
   - The rapid development → caused by globalisation.
2. The decreased inequality in this period can be supported by the fact of the increasing growth in developing countries, especially in Asia.
   China and India have lifted millions out of extreme poverty.
3. The argumentation which supports this view is that constant global inequality has stayed the same based on the fact that while some places have grown quickly and reduced poverty, other countries have not changed much or have gotten worse. As these changes are occurring at the same time, their effects cancel out each other - making global inequality seem to be unchanged and therefore constant.