Week 9- Inequality and Poverty Flashcards
What type of inequality is there?
-Opportunity
-Happiness
-Consumption
-Income
-Wealth
How can we measure inequality?
Gini coefficient
Lorenz curve
What is the objective of inequality indices?
To summarise in a single index the distribution of inequality
How has inequality changed globally?
Increased since 1980
How much of global income does the top 10% make?
52%
What is a hyperpatrimonial and hypermeritocratic society?
Hyperpatrimonial- Inheritance society with extreme wealth concentration
Hypermeritocratic- A society of super managers
What is the mechanism of wealth divergence?
(1) Hyperconcentration in Europe in 18C
(2) Compression of wealth inequality following WW1
(3) Hyperconcentration never hit pre-WW1 levels
Why was there a compression of wealth inequality?
Large destruction of property
Large increase in taxes on capital
What 3 forces can amplify inequality in the 21st century?
-Global tax competition to attract capital
-Growth slowdown
-Unequal access to high financial returns
How is global tax used to attract capital?
Tax rates are lowered to intensify investment from large coorporations.
What 4 forces can explain labour inequality?
-Limited access to education
-High top managerial compensation
-Top rate income tax cuts
-Routine-based technological change
What is routine based technological change?
Technology that replaces repetitive tasks.
How does routine based technological change affect labour?
Displacement in automated tasks
How can inequality be tackled?
-Progressive income tax
-Inheritance tax
-Global wealth tax
-Improving education for poorest in society
What is poverty?
Whether households have enough abilities to meet their needs?
What are non-monetary dimensions of poverty
Health
Education
How much do you earn daily to be in absolute poverty?
Below $1.90 per day
Why does Sachs say countries are poor?
-Stuck in ‘poverty traps’
-Harsh environmental conditions
How will a poverty trap emerge?
When the scope for growing income at a fast rate is limited for those who have too little too invest but expands for those who can invest a bit more
What is a poverty trap?
Where poor initial conditions induce behaviours that reinforce poverty
What else can cause poverty traps?
-Nutrition
-Health
-Natural disasters
-Savings
What do Easterly and Moyo argue about aid?
-It prevents people searching for their own solutions
-Corrupts and undermines local institutions
-Creates a self-perpetuating lobby of aid agencies
What do Banerjee and Duflo argue about aid?
We should understand how poor people make decisions in order to help them the most/
