lesson 14: poverty and redistribution Flashcards
how many people are in poverty in the uk?
14 million
what is absolute poverty?
unable to purchase basic necessities
what is relative poverty?
when people are poor in comparison to society
what are causes of poverty?
unemployment
low wages
sickness and disability
old age
the poverty trap
single parents
what is the poverty trap?
when people pay tax when working so earn less than they would if they were on benefits so they get trapped on benefits
better off on benefits
what is the main policy used to reduce poverty and inequality?
increase progressive tax + transfer payments
what is an example of a progressive tax?
income tax
what is an example of a regressive tax?
vat
whats an attempt to redistribute wealth?
inheritance tax
what does means tested mean?
income dependent
benefits should be…
means tested to reduce inequality
what is fiscal drag?
when in a progressive income tax system the government fails to raise tax thresholds to keep pace with inflation
if it affects the low paid it can lead to higher rates of relative poverty
people will see a rise in their pay so they fall into a larger tax threshold and have to pay more tax revenue so AD falls
what is the unemployment trap often associated with?
the hidden economy as people are tempted to work for cash whilst claiming benefits
what are other policies used to redistribute wealth and income?
labour market policy - minimum wage, anti-discrimination, subsidised training
macro economic policy - measures to reduce unemployment/ increase employment opportunities
spending on education - likely to help the least well off
spending on housing - likely to target those with little wealth
