Unit 19 - Economic inequality, key terms

Question 1

Gini coefficient

Answer 1

A measure of inequality of any quantity such as income or walth, varying from a value of 0 (complete equality) to 1 (complete inequality)

Question 2

Market income

Answer 2

The sum of your income recieved as earnings and your income recieved from business owned by the household or from investments

Question 3

Disposable income

Answer 3

Market income after paying taxes and recieving monetary transfers from the government

Question 4

Final income

Answer 4

Measure of the value of goods and services a household can consume from it’s disposable income. It is disposable income minus VAT paid, plus value of public services recieved

Question 5

Lorenz curve

Answer 5

Graphical representation of inequality of some quantity such as wealth or income. THe perfect equality line is a 45 degree straight line, the measure of inequality is to what extent the curve falls below this line. the closer to the line, the less inequality

Question 6

Endowment

Answer 6

The facts about an individual that may affect his or her income, like physical wealth or quality of schooling, work experiences, nationality and gender or race, class, background

Question 7

Technology

Answer 7

The description of a process using a set of materials and other inputs, including the work of people and machines, to produce an output.

Question 8

Institution

Answer 8

The laws and informal rules that regulate social interactions among people and between people and the biosphere (calles the ‘rules of the game’ in game theory)

Question 9

Segmented labour market

Answer 9

A labour market whose distinct segments function as separate labour markets with limited mobility of workers from one segment to the other ( for example due to discrimination)

Question 10

Predistribution policy

Answer 10

Government actions that affect the endowments people have and their value, inlcuding the distribution of market income and the distribution of privately held wealth (education or anti-discrimination policies)

Question 11

Redistribution policy

Answer 11

Taxes, monetary and in-kind trasfers of the government that result in a distribution of final income that differs from the distribution of market income

Question 12

Progressive (policy)

Answer 12

An expenditure or transfer that increases the incomes of poorer households by more than richer households, in percentage terms!! So this is relative to the original income

Question 13

Regressive (policy)

Answer 13

An expenditure or transfer that increases the incomes of richer households by more that poorer households, in percentage terms!!

Question 14

Categorical inequality

Answer 14

Inequality between particular social groups ( identified by a category like race, nation, caste, religion)

Question 15

Intergenerational elasticity

Answer 15

When comparing parents and grown offspring, the percentage difference in the second generation’s status that is associated with a 1% difference in the adult generation’s status

Question 16

Inequality aversion

Answer 16

A dislike of outcomes in which some individuals recieve more than others

Question 17

Statutory minimum wage

Answer 17

A minimum level of pay laid down by law, for workers in general or of some specified type. The intention of a minimum wage is to guarantee living standards for the low-paid. Many countries enforce this with legislation

Question 18

Intergenerational transmission of economic differences

Answer 18

The process by which the economic status of the adult sons and daughters comes to resemble the economic status of the parents

Question 19

Intergenerational mobility

Answer 19

Changes in the realtive economic or social status between parents and children. Upward mobility occurs when the status of a child surpasses that of the parents. Downward mobility is the converse. A measure for this is intergenerational elasticity