Poverty and Inequality Flashcards
What’s absolute poverty?
When people are unable to afford sufficient necessities to maintain life. The world bank sets absolute poverty at $2.15 per day.
What’s relative poverty?
If people’s income is lower than others in their area. In Britain, it’s classed as those with an income of less than 60% of the median household income.
What’s the poverty line?
The minimum level of income deemed necessary to achieve an adequate standard of living in a country.
What are the causes of poverty?
Poverty is caused by unemployment, a lack of skills, health problems and welfare dependancy.
Absolute poverty is likely to decrease as GDP increases.
Relative poverty increases if those on higher salaries see income increase by more than those on lower salaries or changes in government spending and taxation.
Why has relative poverty been growing in the UK?
Growing inequality in wage growth (the wages of the richest are now 170 times the average worker compared to 60 times before).
Growth in underemployment, zero-hour contracts and temporary jobs.
Decline in trade unions.
Relative fall in state benefits and more regressive taxes.
Rises in long term and structural unemployment.
What’s income?
A flow of earnings.
What’s wealth?
A stock of assets.
What are the measurements of inequality?
The Lorenz curve.
The Gini coefficient.
What’s the Lorenz curve?
Shows the cumulative percentage of the population plotted against the cumulative percentage of income that those people have. A perfectly equal society would have a straight line from corner to corner.
What’s the Gini coefficient?
A/(A+B) - measured between 1 and 0, the bigger the coefficient, the more unequal the country.
What are the causes of income inequality?
Wages - some simply earn more than others.
Wealth levels - someone who already has large wealth finds it easier to build on that wealth.
Chance - those who bought assets at the right time.
Age - younger people earn less than those in the peak of their career.
What’s the significance of capitalism in inequality?
Wage differentials
Private property
Inequality is essential for capitalism to work but excessive inequality causes problems.
