Income distribution & welfare

• What is income defined as?

  Flow of money over a period of time
• What accounts for the largest proportion of income?

  Wages
• How can income be derived besides wages?

  From wealth, such as interest from savings
• What is wealth defined as?

  Stock of assets measured at a date in time
• What is the most common source of wealth for people?

  Their house
• What does geographical distribution of income refer to?

  How income is shared between different regions
• What does size distribution of income refer to?

  How income is shared among households
• What does the Lorenz curve illustrate?

  The degree of equality of income distribution
• What is the Gini coefficient?

  An index measuring income distribution equality
• What does a more even distribution of income promote?

  Sustained economic growth
• How does an uneven distribution of income affect economic growth?

  It could hinder economic growth
• What is one benefit of a more even income distribution?

  More efficient allocation of scarce resources
• How does a more even income distribution affect government welfare payments?

  It reduces government welfare payments
• What social benefit does a more even income distribution promote?

  Social cohesion
• What is absolute poverty?

  Insufficient income for basic necessities
• What are examples of basic necessities in absolute poverty?

  Food, safe drinking water, sanitation
• How is relative poverty defined?

  Income below 60% of median adjusted income
• What does relative poverty indicate about an individual's income?

  Insufficient income to participate in social life
• What is the poverty trap?

  A disincentive to seek work due to benefits
• What is income inequality?

  The unequal distribution of income
• What are some causes of poverty and income inequality?

  Higher unemployment rates
• How does labour productivity affect income inequality?

  It influences skills and quality of the labour force
• What is one consequence of poverty and income inequality?

  Underutilised resources leading to lower growth
• How does a large income gap affect productivity?

  It can disincentivize productivity increases
• What factors affect the consequences of the poverty trap?

  Whether it is relative or absolute poverty
• What role do government policies play in the poverty trap?

  They can reduce poverty and manage resources
• What are the consequences of poverty and income inequality?

  • Underutilised resources leading to lower growth
  • Reduction in social cohesion
  • Less resistance to exploitative policies
  • Disincentives to increase productivity
  • Diminished desire to improve and reduce entrepreneurship
• What are the causes of poverty and income inequality?

  • Higher unemployment rates
  • Proportion of population claiming benefits
  • Labour productivity rates and skills
  • Occupational structure and mobility
  • Living costs
  • Deindustrialisation