The Distribution Of Income And Wealth

Question 1

Income flow variable

Answer 1

Generated earned or received overtime

Wages , Intrest , rent profit/dividends transfer payments:benefits or pensions

Question 2

How do incomes vary ?

Answer 2

Often depends on skill/education

Full time vs part time

Derided demand for labour in different markets

Assets owned by

Question 3

Wealth flow variable

Answer 3

Made up of assets that are generating income

Houses (psychical assets) , bank accounts, cash , shares , pensions funds

Question 4

How does wealth vary ?

Answer 4

Inherited wealth -people find it easier to earn a high income thus maintain there wealth

Government policy -
May find it difficult to redistribute wealth

Changing asset prices - property performance vs stock market prices

Question 5

Statistics of absolute poverty

Answer 5

18% households in uk are in absolute poverty after housing costs

18% children before and 25% after

Question 6

Statistics of relative poverty

Answer 6

22% children relative poverty before housing costs but 30% after

Question 7

Causes of poverty

Answer 7

Unemployment and structural change (miners)

Lack of education and training (transferable skills)

Higher wages for skilled workers

Single parent families

Increased life spans (pensioners)

Question 8

Consequences of poverty

Answer 8

Increased crime and drug problems

Health problems (Awaab ishak 2020)

Soucal unrest ,unstable economy /political institutions

Low educational outcomes

Poverty trap/cycle (which then becomes a cause)

Question 9

The poverty cycle

Answer 9

Children are born into poverty

Low educational outcomes (due to not being able to afford homes in areas of better schools)

Low skilled work and greater chance of unemployment

Question 10

Tackling poverty and inequality

Answer 10

Telling parents about the cognitive development of children and making them aware of significance of education

NM/living wage
EV- harm ability to negotiate wage
Wage rate unemployment
Inflationary potentially

Question 11

Tackling poverty and inequality tax and benefits

Answer 11

Increase benefits improve standard of living

Cut benefits increasing incentive to work

Use more means tested benefit’s

Taper benefits (reduced benefits trap)

Income tax increase personal allowance/changing rates

Move towards direct (progressive) and away from indirect tax

Question 12

Tackling poverty and inequality promoting economic growth

Answer 12

Trickle down theory - may reduce poverty but promote inequality
(Payments to firms)

Education and training.

Direct provision and subsidies (avert absolute poverty)

Question 13

Tackling poverty and inequality universal basic income

Answer 13

Helps to avoid underemployment