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Income and Wealth Distribution

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Income and Wealth Distribution

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Poverty

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Poverty
• Absolute Poverty: A situation where
individuals do not have access to the
basic requirements of life – food,
shelter, clothing.
• Relative Poverty: A situation where
individuals are excluded from being able
to take part in what are considered the
normal, acceptable standards of living
in a society.

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Wealth

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Types of Asset
• Shares
• Houses
• Bank deposits
• Land
• Building Society Accounts
• Currency holdings
• Buildings
• Machinery and
Equipment
• Gold We are considerably richer than you!
• Etc. Title: The Fullers. Copyright: Getty Images available from
Education Image Gallery

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Income Distribution
• Income represents a FLOW
• £x per week, month, year, etc.
• Income can be in the form of:
– Wages
– Rents
– Dividends
– Interest
– Pensions
– Benefit payments
– Income from self employment
– Inheritance

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Income Distribution
• Income can be earned income
(from employment, etc.) or
• Unearned income – inheritance,
benefit payments, pensions, etc.

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Income Distribution

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Redistribution of Income

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Taxation
• Costs
– Market Distortion
– Administrative Costs
– Incentives
– May not impact because some will not be paying tax
– Can be avoided
– May not be targeted at those who need the help
• Benefits
– Reduction in poverty levels
– Can be used to provide incentives

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Legislation

• Minimum Wage – targets those on ‘low wages’


but what is the right level?
• Discrimination – reducing the impact of racial,
sexual and disabled incidences of
discrimination
• Regulation – Employment related regulation

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Equity

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Causes of Inequality

• Individual
• National

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Individual

• Ownership of resources – housing, land, etc.


• Qualifications
• Motivation
• Skills
• Ability
• Family size

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National

• Factor endowments (land, labour, capital)


• Size and quality of labour force
• Climate
• Stage of economic development
• Economic Power – ability to be able to dictate
terms with suppliers, buyers, etc.

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