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The Distribution of Income and Wealth in UK
· Income is a flow. It measures the receipt of money per period of time ( e.g. £200 a week)
· Wealth is a Stock. It measures the value of a person’s wealth at a given point of time e.g. £150,000
The Size distribution of income in the UK
- Top 20 % earned 51% of GDP
- Bottom 20 % earned 2.3% of GDP after the receipt of benefits this was 6.8%
Measuring the Distribution of Income
The Gini Coefficient. This is the area between the Lorenz curve and the 45’ line and the total area under the 45’ line
The Higher the Gini Coefficient the greater the inequality
Absolute Poverty:
This measures the number of people living below a certain income level, which is necessary to be able to afford basic goods and services
Relative Poverty:
This measures the income of households compared to the average income in the country. Thus increased economic growth may lead to better living standards however if this is distributed unequally then relative poverty will increase.
· 1998 UN Human Development Report cited UK as a country with one of the highest levels of poverty in industrialised nations
· Nine million people in the UK receive income support from the govt
Essays and Revision Notes on Inequality
Poverty, Income Inequality and Economic Growth