1.7.1 The distribution of income and wealth

• Wealth is the total value of assets accumulated over time
• What are examples of income sources?

  Wages, salaries, profits
• A Lorenz curve further from the 45-degree line indicates greater inequality
• Order the sources of income inequality from most direct to less direct:

  1️⃣ Education & Skills

  2️⃣ Occupation

  3️⃣ Experience

  4️⃣ Discrimination

  5️⃣ Market Factors

  6️⃣ Ownership of Capital
• The distribution of wealth in the UK includes real estate, financial assets, and pension funds
• How much of total wealth in the UK is held by the richest 10%?

  Over 40%
• The richest 10% hold over 40% of total wealth
• What is income defined as?

  Flow of earnings
• What tools are used to measure the distribution of income or wealth in an economy?

  Lorenz curve and Gini coefficient
• A Gini coefficient of 1 indicates perfect equality

  False
• Unequal access to quality education leads to different earning capacities
• Financial assets account for 33% of total wealth.
• The richest 10% hold over 40% of total wealth.
• London has the highest income levels but also the highest rates of poverty.


  True
• What is the Gini coefficient for income inequality in the UK?

  Around 0.35
• The Gini coefficient for wealth inequality in the UK is around 0.60-0.65.


  True
• Match the policy with its advantage:

  Progressive Taxation ↔️ Reduces income disparity, funds public services

  Universal Basic Income ↔️ Provides a guaranteed income, reduces poverty

  Minimum Wage ↔️ Increases income for low-wage workers
• Apprenticeships provide on-the-job training and career pathways.
• What is income defined as in economics?

  Flow of earnings
• Income is a flow while wealth is a stock.


  True
• Match the measure with its description:

  Lorenz Curve ↔️ Graphical representation of income/wealth distribution

  Gini Coefficient ↔️ Numerical measure of income/wealth inequality
• Wealth refers to earnings received over a period.

  False
• What is the role of education and skills in income inequality?

  Leads to different earning capacities
• Property accounts for the largest share of total wealth in the UK.

  True
• What is the distribution of wealth in the UK influenced by?

  Inheritance, investment returns, property appreciation
• Wealth is more equally distributed than income in the UK

  False
• Wealth is the total value of accumulated assets
• Match the feature with its correct description:

  Definition of Income ↔️ Earnings received over a period

  Definition of Wealth ↔️ Total assets accumulated over time

  Nature of Income ↔️ Flow

  Nature of Wealth ↔️ Stock
• The 45-degree line in a Lorenz curve represents perfect equality
• What are some sources of income inequality in an economy?

  Education, occupation, discrimination
• Match the trend with its description and contributing factors:

  Rising Inequality ↔️ Widening gap between the richest and poorest due to technological advancements and globalization

  Regional Disparities ↔️ Variations in income and wealth across regions due to uneven economic development
• Wealth is significantly more unequally distributed than income.

  True
• What are the three key trends in income and wealth distribution?

  Rising inequality, regional disparities, generational differences
• Match the key trend with its description:

  Rising Inequality ↔️ Widening gap between the richest and poorest

  Regional Disparities ↔️ Significant variations in income and wealth across different regions

  Generational Differences ↔️ Income and wealth patterns differing between generations
• A Gini coefficient of 0.35 indicates moderate income inequality.
• What are three factors contributing to higher income inequality in the UK compared to other countries?

  Higher returns to capital ownership, less progressive tax system, weaker social safety net
• Free higher education in the UK could lead to an oversupply of graduates.


  True
• What are four categories of policies to reduce income and wealth inequality?

  Fiscal policies, labour market policies, welfare policies, education and training