Poverty And Inequality (Bk27) Flashcards
What is absolute poverty
Households whose income level is too low to allow them to purchase the survival basket of goods
How is absolute poverty measured
- Head count ratio — estimate of percentage of population in this situation
- World bank poverty line — income per day at ppp
Measures of inequality (3)
- GNI per capita
- The Lorenz curve
- Gini coefficient
A gini coefecient result of 0 means what
Complete equality
A gini coefficient result of 1 means what
Complete inequality
How do you work out GNI per capita
GNI / population
Gini coefecient calculation
A / A +B
Relative poverty definition
Households that are below the threshold poverty line
What is the poverty threshold
60 % of median adjusted household income
Causes of poverty + inequality (5)
-Distribution of wealth
- labour markets
- demographic changes
- government policies
- other e.g. war, corruption or natural disasters
What measures are used to reduce poverty (6)
- Benefits
- max prices
- provision of merit goods
- national minimum wage
- supply side policies
- progressive taxation
What does the kuznets curve show
The relationship between level of economic development and the degree of income inequality
What are the three stages to the kuznets curve
1- the early stage - where there is even distribution of
Low income
2- development stage - where some benefit more than others
3- later stage - society can afford to redistribute income
What is a capitalism society
A society where capital is privately owned and workers are paid wages by private firms
Features of capitalism
- minimal gov intervention
- inequality motivates workers
- can lead to monopolies occurring
- wealth inequality
What’s a savings gap
Difference between actual savings and the level of saving needed to achieve growth
What is the Harold domars model
Savings provide the funds for borrowing and investment
- growth depends on the level of saving and productivity of investment
What is the Lewis model
A dual economy
- Agricultural / primary
- Urban / industrial
Workers migrate from the rural economy to the urban economy as they are attracted by wider opportunities and higher incomes
