3.3 Addressing Income and Wealth Inequality

Flashcards on Income and Wealth Inequality

Income

Money received regularly, measured over time, from sources like wages or dividends.

Wealth

Total value of assets owned at a point in time, minus any debts; a cumulation over time.

Earned Income

Money received from work.

Unearned Income

Gains from investments and dividends.

Financial Assets

Includes stocks, bonds, and savings accounts.

Non-Financial Assets

Such as real estate and personal property.

Gross Income

Total income before taxes and deductions.

Net Income

Income after taxes and deductions, indicating actual earnings.

Disposable Income

Income available for spending and saving after taxes.

Wealth Inequality

The distribution of assets, such as property, investments, and savings.

Income Inequality

The extent to which income is distributed unevenly among a population.

Gini Coefficient

Measure of inequality, calculated from the Lorenz curve, ranging from 0 (perfect equality) to 1 (perfect inequality).

Income Share Ratios

Compares the income of the top 10% of earners with that of the bottom 10%.

Lorenz Curve

Graphically represents the distribution of income or wealth.

Net Worth Comparisons

Focus on wealth distribution by comparing the net worth of different population segments.

Globalization's Impact

The integration of global economies, leads to job displacement and wage suppression in some sectors.

Skill-Biased Technological Change

Favors highly skilled workers, increasing their demand, while the need for middle-skilled jobs dwindles.

Progressive Taxation

Taxation that increases with income, can reduce inequality but might also deter high-income earners.

Regressive Taxation

Lower-income earners pay a higher percentage of their income in taxes, exacerbating income disparities.

Wage Disparities

Differences in wages across various sectors and among different demographics.

Minimum Wage Policies

Sets a baseline for employee remuneration, aimed at ensuring a standard living wage.

Transfer Payments

State-provided payments that include welfare benefits, social security, and other subsidies.

Progressive Taxation

Involves higher tax rates for higher income brackets, aiming to redistribute wealth more fairly.

State Provision of Essential Goods and Services

Government provision of essential services that ensures equitable access regardless of income level.

Unemployment Benefits

Designed to support individuals temporarily out of work, encouraging them to seek new employment.

Pensions

Provide income for retirees, aiming to reduce senior citizen poverty.

Child Benefits

Governments often provide financial assistance to families, helping to alleviate child poverty.