The distribution of income and wealth

• What is wealth defined as?

  A stock of assets
• What does wealth inequality refer to?

  The unequal distribution of assets
• How is income defined?

  Money received on a regular basis
• What is income inequality?

  Uneven distribution of income across a nation
• What are the two measurements of income inequality?

  • The Lorenz curve
  • The Gini coefficient

  
• What does the Lorenz curve measure?

  The distribution of income and wealth

  
• What does the line of perfect equality on the Lorenz curve represent?

  Equal distribution of income among the population

  
• What does a significant level of inequality on the Lorenz curve indicate?

  The richest own a higher proportion of income

  
• What does the Gini coefficient represent?

  A numerical value for inequality

  
• What does a Gini coefficient value of 0 indicate?

  Perfect equality
• What does a Gini coefficient value of 1 indicate?

  Perfect inequality
• What is the difference between equality and equity?

  Equality is equal distribution; equity is fairness
• What has caused inequality in wages recently?

  More part-time and temporary jobs available
• How does education level affect lifetime earnings?

  Those with degrees earn more than A Levels
• Why do low-skilled service jobs tend to pay less?

  They are often in the public sector
• Why do women earn less than men on average?

  Due to career breaks and fewer hours worked
• What factors contribute to wage discrimination?

  Age, disabilities, gender, and race
• How do state pensions and welfare payments affect income inequality?

  They increase less than wages, lowering benefits
• What is the impact of regressive taxes on income inequality?


  They increase the burden on lower incomes
• How does unemployment contribute to income inequality?

  It causes relative poverty and increases inequality
• What tax changes occurred in the UK over the last few decades?

  Shift towards indirect taxes and lower rates
• What has caused global inequality between countries?

  Exclusion based on social groups and disasters
• How do population issues in Africa affect poverty reduction?

  They complicate efforts to reduce poverty
• What is the life expectancy difference between women in Japan and Sierra Leone?

  87 years in Japan, 46 years in Sierra Leone
• How are developing countries catching up with developed countries?

  They are growing faster economically
• What historical factors contributed to economic development in Britain?

  Social mobility, political liberty, and free speech
• What was the impact of the Industrial Revolution on wages?

  It led to higher wages and reduced food prices
• What does Kuznets hypothesis state about inequality?

  Inequality increases as society industrializes
• What does Kuznets curve illustrate?

  The relationship between economic development and inequality

  
• How does market failure relate to income and wealth distribution?

  Inequitable distribution leads to misallocation of resources
• How can wealth be redistributed?

  Through government transfers and education
• What did Thomas Piketty argue about inequality?

  The capitalist system leads to continued inequality
• How does inequality motivate workers?

  Encourages learning new skills and hard work
• How can monopolies affect consumers?

  They can exploit consumers with higher prices
• How does inheritance contribute to wealth inequality?

  Wealth is concentrated in a few families
• What role does government intervention play in income redistribution?

  It can create wage equality and reduce inequality
• What negative effects can result from income inequality?

  Social unrest and demotivation of lower incomes
• What are the causes of income and wealth inequality?

  • Inequality in wages
  • Welfare payments and taxes
  • Unemployment
  • Changes to the UK tax system
  • Inequality between countries
• What are the likely benefits and costs of more equal and more unequal distributions?

  Benefits of more equal distributions:

  • Reduces poverty
  • Increases social cohesion

  
  

  Costs of more equal distributions:

  • May reduce motivation to work hard
  • Can lead to inefficiencies in the market

  
  

  Benefits of more unequal distributions:

  • Motivates workers to improve skills
  • Reflects productivity in wages

  
  

  Costs of more unequal distributions:

  • Exploitation by monopolies
  • Concentration of wealth limits opportunities