Poverty and inequality in developed and developing countries Flashcards
Why is GNI per capita not necessarily a good measure of how developed a country is?
- inequality of income
doesn’t measure informal economic activity
Give two examples of informal economic activity that may take place in developing countries?
- subsistence agriculture
- street traders, eg shoe-shiners, roadside barbers
What does the Lorenz Curve measure?
distribution of income in a country
What does the Gini coefficient measure?
degree of inequality in a country
What do the axis of a Lorenz Curve show?
cumulative % of households
cumulative % of income
How is the Gini coefficient calculated?
It’s the area between the Lorenz curve and the straight equality line.
Does a higherGini coefficient mean more or less equality?
more - as if no inequality it would be zero
Give three reasons why measuring relative income per household isn’t necessarily a good measure of equality.
- Households are different sizes so have different needs.
- It ignores wealth (could have high wealth low income).
- Governments may reduce inequalities through services (eg healthcare) that don’t form part of income.
Define absolute poverty.
where a household’s income is insufficient to buy minimum goods and services regarded as necessity for survival
Define UK relative poverty.
where a household’s income falls below 60% of median adjusted household disposable income
Define persistent poverty.
where a household is currently in relative poverty and has been for at least two of last three years
Define headcount ratio.
measure of % of a country’s population living below poverty line
Define International Poverty Line.
agreed measure that defines absolute poverty line based on international prices, set at PPP$2.15 from September 2022
Name three countries where more than 50% of population are below poverty line.
Burundi, Mozambique, Tanzania
Give three reasons why the labour market can contribute to inequality and poverty.
- structure of employment, eg relative pay between skilled and unskilled workers, particularly in times of change eg in technology
- wage gap between men and women
- underdeveloped labour market, eg rural v urban
Why might demographic change contribute to inequality and poverty?
Ageing population - living longer and fewer children - means fewer working to support older age groups with eg pensions
Which form of tax in UK will reduce inequality?
income tax, as progressive
Which form of tax in UK will increase inequality?
VAT, as regressive
Is inequality inevitable in a free-market capitalist society?
Yes, as there has to be an incentive to work and not everyone is able to earn the same (eg through disability or intelligence).
Give a reason why the pandemic may have increased inequality?
Those in well paid jobs more likely to have been able to work from home than those in unskilled low-paid jobs (though furlough payments helped to some extent).
