Poverty & Inequaltiy Flashcards
absolute poverty
a global measure of poverty
measured at PPP of living below 2.15USD /day
relative poverty
earning less than 60% of the average income
21% in the UK
How many people lived in absolute poverty in 2013
more than 767 million
3 most prominent factors affecting poverty
1- infrastructure
2- education and training
3- Aid
Infrastructure as a factor influencing poverty
poor infrastructure limits capacity to access key resources
limiting productivity
so in South Korea to combat low levels of infrastructure concrete was given for free with instructions, to any area or person who wanted it
Education and training as a factor affecting poverty
1975 no French teachers in Madagascar
low skills and challenge to access skills
this led to poverty increasing
this led to a lost generation
Aid as a factor affecting poverty
the UK gave £350 to Pakistan in 2015.
better education and healthcare leads to higher productivity and GDP increasing
In a low corruption country aid can be very successful and higher productivity reduces incomes and poverty
this will not be the case if AID goes to politicians
2 types of inequality
wealth inequality
Income inequality
income inequality
income is the flow of money each year
this can include a salary other flows
perfect income equality is when everyone gets paid the same
income inequality is when the best paid workers take home more income then the rest of the countrys workers
in 2017 CEO’s earned 271 times the average worker
What does the Lorenz curve show
income distribution between % income inequality
Gini Coefficnenent Eq
G= A // A+B
Gini Coefficient
a higher Gini coefficient indicates higher income inequality between 0-1.
0= perfect income equality
1= perfect income inequality
A measure of the income inequality in a country
Wealth
Stock of all assets
3 Factors influencing income
Education
U/P
Trade Unions
5 factors influencing income inequality
- min wage
- assortive maiting
- social benefits and tax
- the R>G hypothesis
-inheritance
Minimum wage rate for inequality
Tony Blair and his labour govt introduced the minimum wage
this decreased income inequality
Assertive Maiting
It is more likely for high income and wealth individualised too settle with equality wealth and high income
Therefore wealth is ring fenced and invested into children who have a highly privileged upbringing
this is perpetuated equality
Social benefits and tax
progressive income tax
Decreased in inequality
increased spendign from government supports those in poverty
R>G
A ‘it takes money to make money’ approach
theories that with more wealth it is easier to achieve greater % of wealth
R = Rate of return
wealth growth is R
Income growth is G
This suggests that those with money grow their money faster than incomes increase perpetuating fiscal inequality
