Poverty and inequality Flashcards
Absolute poverty
Minimum amount of resources a person needs to survive, including food, shelter, clothing, access to clean water, sanitation, education and information- measure is $1.90 a day
Relative poverty
In comparison to other countries- if they are living below a certain income threshold in a particular country
Measures of relative poverty
In EU people falling below 60% of median income are said to be at risk of poverty
Other measures of poverty (2)
- UN Human Poverty Index
2. Ration method
Causes of changes in absolute poverty and relative poverty (6)
- Level of indebtedness
- Level of unemployment
- Health or education
- Access to public services
- State of economy and real incomes
- Distribution of income
Income
Money earned by a person over a period of time (flow concept)
Wealth
Stock of assets a person owns
Measurements of income inequality (2)
- Lorenz Curve
2. Gini coefficient (numerical calculation based on Lorenz Curve)
Calculation for Lorenz Curve
G=A/A+B or G=A/A+B x100
Causes of income inequality and wealth inequality within countries (7)
- Globalisation
- Education, training and skills
- Wage rates
- Strength of TUs
- Degree of employment protection
- Social benefits
- Progressiveness of tax system
Causes of income and wealth inequality between countries (8)
- Natural resources
- Geography
- History
- Degree of political stability
- Macroeconomic policies
- Amount FDI attracted by different countries
- Degree of trade liberalisation
- Degree if technological change
Kuznets curve
Shows that when the economy is at an early stage of development and primarily agricultural, there is relatively low level of income equality and how this increases as industrialisation takes place –> BUT 30 years to crisis showed not true
