Income Distribution

Income

Flow of funds, funds earned from wages/salaries or from the sale of household resouces

Earned Income

Income from labour (salaries and wages)

Unearned Income

Income from the sale of household resources (assets or capital)

Direct Taxes

Incidence and Burden of the Tax falls on the same individual/household

Market Income

Total Private Income from earned and unearned income

Indirect Tax

Incidence and Burden of the Tax fall on different individuals/households

Income Tax

Tax paid on gross income, progressive

Transfers

Benefits/subsidies given by the government to boost disposable income

Disposable Income

Market Income + Direct Tax + Transfers

Social Wage

Subsidised Services provided by the government (education and healthcare)

Final Income

Disposable Income + Indirect Tax + Social Wages

Wealth

Stock of assets, current value of assets a household accumulates through savings, difference between household assets and liabilities

Lorenz Curve

Graph of %population vs %national income, ranked lowest income earners to highest income earners

Gini Coefficient

Area between diagonal and Lorenz curve/entire area under diagonal

Perfect Income Equality

Everyone earns the same amount, GC = 0

Perfect Income Inequality

One household earns all national income, GC = 1