Unit 19: Economic Inequality Flashcards
What is economic inequality?
Differences in income, wealth, and opportunities among individuals or groups.
What is categorical inequality?
Inequality based on group identity like race, gender, or nationality.
What is intergenerational inequality?
Differences in status passed from one generation to the next.
What does intergenerational elasticity measure?
How much a child’s status is determined by their parent’s status.
How has global inequality changed since 1980?
Between-country inequality has decreased, while within-country inequality has increased.
What is the ‘missing middle’?
A trend where middle-income jobs are disappearing, while low- and high-income jobs grow.
Why might inequality be seen as unfair?
When it is based on factors like birth, discrimination, or inheritance rather than effort.
What is Rawls’ veil of ignorance?
A method for evaluating fairness by imagining not knowing your future social position.
What is the feasible frontier?
A curve showing the trade-off between income for the rich and poor.
What determines an individual’s income?
Endowments, technology, and institutions.
How does automation affect inequality?
Increases inequality short-term but may reduce it long-term with proper policies.
What is labour market segmentation?
A divide between ‘good’ jobs with security and ‘bad’ jobs with low pay.
What is redistribution?
Policies that reduce income differences after the market, such as taxes and transfers.
What is predistribution?
Policies that reduce inequality by improving endowments or market outcomes.
What are progressive policies?
Policies that benefit poorer households more than richer ones.
What are regressive policies?
Policies that benefit richer households more than poorer ones.
How can education reduce inequality?
By increasing human capital and improving job prospects.
How does inequality affect economic growth?
It can reduce trust, productivity, and increase guard labour.
Why doesn’t redistribution always harm incentives?
Because high inequality can waste talent and reduce cooperation.
Which countries reduce inequality most through spending?
Those where expenditures, not taxes, are the main redistribution tool.
