Week 9- Inequality and Poverty

Question 1

What type of inequality is there?

Answer 1

-Opportunity
-Happiness
-Consumption
-Income
-Wealth

Question 2

How can we measure inequality?

Answer 2

Gini coefficient
Lorenz curve

Question 3

What is the objective of inequality indices?

Answer 3

To summarise in a single index the distribution of inequality

Question 4

How has inequality changed globally?

Answer 4

Increased since 1980

Question 5

How much of global income does the top 10% make?

Answer 5

52%

Question 6

What is a hyperpatrimonial and hypermeritocratic society?

Answer 6

Hyperpatrimonial- Inheritance society with extreme wealth concentration
Hypermeritocratic- A society of super managers

Question 7

What is the mechanism of wealth divergence?

Answer 7

(1) Hyperconcentration in Europe in 18C
(2) Compression of wealth inequality following WW1
(3) Hyperconcentration never hit pre-WW1 levels

Question 8

Why was there a compression of wealth inequality?

Answer 8

Large destruction of property
Large increase in taxes on capital

Question 9

What 3 forces can amplify inequality in the 21st century?

Answer 9

-Global tax competition to attract capital
-Growth slowdown
-Unequal access to high financial returns

Question 10

How is global tax used to attract capital?

Answer 10

Tax rates are lowered to intensify investment from large coorporations.

Question 11

What 4 forces can explain labour inequality?

Answer 11

-Limited access to education
-High top managerial compensation
-Top rate income tax cuts
-Routine-based technological change

Question 12

What is routine based technological change?

Answer 12

Technology that replaces repetitive tasks.

Question 13

How does routine based technological change affect labour?

Answer 13

Displacement in automated tasks

Question 14

How can inequality be tackled?

Answer 14

-Progressive income tax
-Inheritance tax
-Global wealth tax
-Improving education for poorest in society

Question 15

What is poverty?

Answer 15

Whether households have enough abilities to meet their needs?

Question 16

What are non-monetary dimensions of poverty

Answer 16

Health
Education

Question 17

How much do you earn daily to be in absolute poverty?

Answer 17

Below $1.90 per day

Question 18

Why does Sachs say countries are poor?

Answer 18

-Stuck in ‘poverty traps’
-Harsh environmental conditions

Question 19

How will a poverty trap emerge?

Answer 19

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

Question 20

What is a poverty trap?

Answer 20

Where poor initial conditions induce behaviours that reinforce poverty

Question 21

What else can cause poverty traps?

Answer 21

-Nutrition
-Health
-Natural disasters
-Savings

Question 22

What do Easterly and Moyo argue about aid?

Answer 22

-It prevents people searching for their own solutions
-Corrupts and undermines local institutions
-Creates a self-perpetuating lobby of aid agencies

Question 23

What do Banerjee and Duflo argue about aid?

Answer 23

We should understand how poor people make decisions in order to help them the most/