3.3 Fair distribution of income

• What is income defined as?

  The reward for services provided by production factors
• How is wealth defined?

  The market value of all owned assets
• Where does income come from?

  Wages, rent, interest, profit, and dividends
• Is there a link between income and wealth?

  Yes, there is a link
• What are income earning assets?

  Property, savings, shares, land, pensions
• What does fair distribution of income refer to?

  • Equitable distribution of total income
  • Among all citizens of a country
• What is income inequality?

  Uneven distribution of income among the population
• What are some reasons for income inequality?

  Different skills, inheritance, discrimination, government policies
• What are the impacts of income inequality?

  Social tension, reduced growth, health problems
• What measures can improve income distribution?

  • Progressive taxation
  • Welfare benefits and income support
  • Minimum wage laws
  • Investment in education
• What is progressive taxation?

  Higher tax rates for high-income earners
• How do welfare benefits help income distribution?

  They provide income to the most vulnerable
• What is the purpose of minimum wage laws?

  To ensure low-paid workers earn a basic income
• How does investment in education improve income distribution?

  It provides skills to increase income
• What are the effects of the National Living Wage policy?

  • Higher minimum wage
  • Increased work incentives
  • Potential job creation
  • Risk of reduced purchasing power
• What is the current National Living Wage in the UK?

  £9.44
• What is the impact of higher rates of income tax?

  May create more jobs and higher taxes
• What is a risk associated with higher taxes?

  Risk of a brain drain from the country
• What is the role of apprenticeships in income inequality?

  They provide paid qualifications for individuals
• How do subsidies for childcare help income distribution?

  They allow low-income workers to access education
• Why is perfectly equal income distribution considered undesirable?

  • Rewards should incentivize hard work
  • Current income inequality levels are too high
• What are indicators of wealth distribution?

  Inheritance, savings, property, investments
• How does inequality arise in wealth distribution?

  Due to skill, experience, energy, health, opportunity