Understanding Income Inequality and Poverty in Australia

Income distribution

Allocation of returns from the four factors of production among the population of a country

Income inequality

The degree to which income is unevenly distributed among people in the economy

Transfer payment

Payments received by individuals and families from the federal government in the form of cash social benefits, such as pensions, unemployment benefits, and family allowances

Wealth

Total assets owned by an individual or income unit, and the nation at any one time; includes physical assets such as real estate and consumer durables as well as financial assets

Poverty

The situation of people whose resources are so limited as to exclude them from the minimum acceptable way of life in the country in which they live

Equivalence scales

Scales that indicate the income levels needed by different types of family units to attain the same, or equivalent, standard of living

Gini coefficient

A numerical measure of the degree of inequality involved in any income distribution of a country, based on the areas under the Lorenz curve

Henderson poverty line

The minimum desirable level of household income established by professor Henderson in the commission of inquiry into poverty in 1975; these minimum levels are revised to accommodate changing economic conditions

Lorenz curve

A graphical representation of the inequality of a nation's income distribution

Poverty line

A level of income giving a minimal standard of living for a particular group of people in a society

Percentage of people below the poverty line (50% of median)

13.3

Percentage of children below the poverty line (50% of median)

17.4

Number of people below the poverty line (50% of median)

2,990,300

Number of children below the poverty line (50% of median)

731,300

Percentage of people below the poverty line (60% of median)

20.1

Percentage of children below the poverty line (60% of median)

24.9

Number of people below the poverty line (60% of median)

4,534,700

Number of children below the poverty line (60% of median)

1,048,900

Unearned income

Government cash benefits and superannuation

Superannuation

Retired or disabled people who contributed to the fund or beneficiaries

Market economies

Distribute income to the factors of production making the value of production

Factors determining wages

Also responsible for determining how the economy's income is distributed among the various members of society

Social assistance benefits

In 2016, 26.2% of the federal budget was spent on social assistance benefits to Australian residents

Non-wage benefits

Received by social security include: transport, housing, etc.

Wealth Tax

Tax on individual assets to redistribute wealth.

Philanthropy

Wealthy individuals donating to societal causes.

Gini Coefficient

Measures income inequality; higher values indicate more inequality.

Lorenz Curve

Graph showing income distribution compared to perfect equality.

Absolute Poverty

Living on less than USD 1.90 per day.

Relative Poverty

Income below the average for a specific country.

Composite Indicators

Combine multiple metrics for comprehensive measurement.

Human Development Index (HDI)

UN measure of quality of life based on GDP, education, health.

Multidimensional Poverty Index (MPI)

UN measure assessing various poverty indicators.

Underemployment

Employment below full-time or inadequate for skills.

Primary Labour Market

Stable jobs with defined paths and high wages.

Secondary Labour Market

Jobs with frequent unemployment and low wages.

Health Disparities

Income inequality linked to unequal health outcomes.

Education Gaps

Income inequality limits educational opportunities.

Social Unrest

High income inequality can lead to societal instability.

Political Influence

Wealthy individuals affect policies favoring their interests.

Wealth Redistribution

Reallocation of wealth to reduce inequality.

Progressive Taxation

Higher income earners pay a larger tax percentage.

Social Welfare Programs

Government assistance for individuals in need.

Universal Basic Income (UBI)

Regular cash payments to all citizens from government.

Economic Costs of Poverty

Poverty increases crime and social issues.

Intergenerational Impact

Poverty often passed from parents to children.

Urban Poverty

Poverty measurement often neglects urban living conditions.

Minimum Income Standards

Country-specific poverty lines determining poverty levels.

Discrimination

Inequality caused by unequal treatment based on characteristics.

Economic Growth

Extreme inequality can hinder overall economic development.

Vulnerability to Shocks

Poor individuals face greater risks from economic changes.