.

18 and
Poverty ve inequality
ve r rwin har

Poverty
definition

absolute defined
poverty in terms of the minimum amount of

resources a
person needs to survive

-
deprivation of fundamental human needs

relative
poverty : is measured in comparison with other people in the

country
.
-
household has insufficient income to
participate

in the normal" social life of their country

.

other measures of
poverty
The United Nations Human Poverty Index

deprivation
-
indices include in the
poorest countries (HPI-1)
,
HPI-2 is more relevant to developed countries

Ratio method
-

↳ calculate proportion of income spent on necessities .

Inequality
& ef inition

income inequality :
the unequal distribution of earnings between

individuals

wealth
inequality : difference in the real value of stocks of assets

owned
by individuals

of
measures income
inequality
The Lorenz curve

* axis of population
:
%

:% of income
y-axis

10 O

I
430 represents perfect
80 line equality

60 Lorenz curve plots the cumulative of

A
cumulative
48 population against the of

B
20 total income
.

2040 60 80 100

poorest < richest

 The GiNi coefficient

↑ calculated the
to determine
degree of
inequality
formula =
A

A + B
-

the
larger A ,
the higher to coefficient
4 total
a re a
GiNi value should be between O and 1
-

1-
-

or as a all income with 1

person cabsolute

-
percentage - inequality)
equality
-
o perfect
A
· + 100

causes of income inequality within countries

.
7
type of tax
system it
progressive VS
regressive tax

Cd
inequality ( 2 ↑
inequality)
·

levels education skills

2
. of ,
training ,

-
leads to good job +Pay
:

within
.
3
Demographics country
population
> ↑
aging inequality
-

4. Geographic differences

↑ income where ↑ firms located

welfare protection Gout

4
.
system
:
of
degree -

welfare state eg. . NHS

.
6 dif in rate between occupation
wage
4 tailor vs
surgeon
7 trad
. union
activity

wealth disparity
.
8
disparity > income
-
 causes of income inequality between countries

.
1
levels of corruption 6
. resources

.
2 standard education system 7
.
geographic location

3
.
technological progress 8
. political stability

policy foreign investment

4
. macroeconomic 9
. direct

S .
+ rade liberisation

Impact of economic development on

inequality
The Kuznet curve

level of

income inequality trends

as a
country develops,

inequality initially increase

trend
-eventually this

decrease .

stage of

development

capitalism +
inequality
capitalism
free market
-

-small fort. :n taxes of

,

firms lead
-

private the
way
demand devices provide most
-

-
supply it's
+
left to own

efficient allocation of resources

.

impact on
inequality
-lead to big between High and low income earners
gap
-

by passin 2 key policy tools to improve inequality

.