Poverty and inequality

what is absolute poverty

unable to afford basic things we need likely below poverty line of 2.15$

What is relative poverty

earning les than 60% of a country’s average income

factors that influence poverty

1 Infrastructure

2 Education and Training

3.Aid

how does infrastructure influence poverty

Better infrastructure , more productive , increase income , lower poverty

how does education and training influence poverty

better education , decrease unemployment , increase productivity , increase income , decrease poverty

how does aid influence poverty

if aid spent on healthcare or education, increase productivity , increase income , decrease poverty

however , corruption may increase poverty

what is income inequality

best paid workers receive higher income than rest of ocuntry’s workers

Lorenz curve

the more income inequality the further the line will be from prefect income equality

How to calculate gini coffecient

A / A+ B

between 0-1

0 perfect equality

1 perfect inequality

what is wealth inequality

wealth is shared unequally between population

causes of changes in inequality

M.A.R.S.I

Minimum wage rates

assortative mating

Social benefits and tax

The R > G Hypothesis

inheritance

how does minimum wage change inequality

increase earnings for poor

increase wage costs , decrease profits , decrease managers salaries

improve inequality

how does assortative mating change inequality

talented rich successful couples

so children will be rich

inequality worsens

how does social benefits and tax change inequality

progressive tax , rich pay a high percentage of tax and poor pay lower percentage of tax , this decrease income inequality

tax revenue , Benefits/pensions , decrease income inequality

how does r>g hypotheis change inequality

r- rate of return

g - economic growth rate

Wealth increase quicker than income , so rich get richer , wealth inequality

how does inheritance change inequality

more inheritance n increase wealth , r>g hypothesis , wealth gap increased , worsening wealth inequality