Unit 4 (Inequality)

Question 1

The Gini coefficient

Answer 1

• The cumulative share of income earned by each share of
  households, measuring a society’s distance from perfect equality
• is between 0 and 1 (the higher inequality, the higher the coefficient

Question 2

The 90-10 Wage Gap

Answer 2

• the difference in the 90th and 10th
  percentiles as a percent of the 10th percentile wage, or (w90 –
  w10)/w10

Question 3

The 50-10 Wage Gap

Answer 3

The difference in the 50th and 10th
percentiles as a percent of the 10th percentile wage, or (w50 –
w10)/w10

Question 4

The skilled to unskilled wage gap

Answer 4

• Gap increases if the relative demand for skilled workers increases faster than the relative supply of skilled workers
  (DH ↑ > SH ↑)

Question 5

Possible Factors That Widened the Wage Gap between skilled and
unskilled workers

Answer 5

• Supply and demand
• Increased physical capital
• Supply shifts
• international trade
• Institutional changes in the labour market

Question 6

Supply and demand (Widened skill wage gap)

Answer 6

• Demand for skilled workers increased relatively more than
  demand increased for unskilled workers
• A decrease in the supply of skilled workers or an increase in the
  demand for skilled workers could cause a widening of the wage
  gap

Question 7

increased physical capital

Answer 7

• Increased physical capital helped to increase the productivity of
  skilled workers
• machines are replacing low
  skilled workers, or more highly skilled
  workers needed e.g. for research

Question 8

Supply Shifts

Answer 8

In demand of goods and services as well as in
supply of skills

Question 9

international trade

Answer 9

e.g. outsourcing of low skilled jobs to foreign
countries

Question 10

Institutional changes in the labour market

Answer 10

• Trade unions
• Minimum Wage
• Unemployment Insurance
• Active labour market policies (e.g. furlough scheme during
  pandemic

Question 11

Ways to calculate gender pay gap (GPG)

Answer 11

• Adjusted
• Unadjusted

Question 12

Unadjusted GPG

Answer 12

• Raw figure without any adjustment for certain factors e.g.
  working pattern, motherhood, occupational segregation etc

Question 13

Adjusted GPG

Answer 13

• Adjusted pay gap measures the pay gap after adjusting for various factors that might influence the pay gap
• such as type of occupation, education, private/public sector and
  experience

Question 14

The Equality Act 2010 UK

Answer 14

• Statutory Duties
• Gender Pay Gap Information

Question 15

The Equality Act 2010 UK (Statutory Duties)

Answer 15

• Men and women in the same employment performing equal work must receive equal pay, unless any difference in pay can be justified

Question 16

The Equality Act 2010 UK (Gender Pay Gap Information)

Answer 16

• As of 2017 Large employers (more than 250) must publish data on their gender pay gaps

Question 17

The Equality Act 2010 (Specific Duties and Public Authorities)

Answer 17

Public bodies with over 250 employees must:
- Publish relevant, proportionate information demonstrating compliance with the Equality Duty annually.
- Set and publish equality objectives at least every four years.

Question 18

Gender pay gap contributing factors

Answer 18

• Working Pattern
• Motherhood
• Labour market segmentation
• Age groups

Question 19

Working pattern

Answer 19

• Form of contract e.g. Full time, Part Time, mini job, casual job

Question 20

Age groups

Answer 20

• Gender Pay Gap lower among young employees

Question 21

Labour market segmentation

Answer 21

• High wage sectors such as science, technology and engineering sectors are male dominated (80% of employees)
• About 30% of the total gender pay gap can be explained by an overrepresentation of women in relatively low-paying sectors such as care, sales or education

Question 22

Motherhood penalty

Answer 22

• systematic disadvantages mothers face
• lower hourly pay (steepens with
  each child)
• overlooked for promotions
• left out of training and education
  opportunities
• sidestepped from specific high-
  value projects
• End up in part time instead of full
  time

Question 23

intergenerational regression

Answer 23

Yc = βYf + S

Yc= Son;s lifetime earnings
β = intergenerational income elasticity
Yf = father’s lifetime earning
S = captures all other factors influencing the child’s income

Question 24

Factors in intergenerational mobility

Answer 24

• Education
• Occupation/Industry
• Social Class
• Social capital