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Inequality and the Redistribution of Income

Inequality and the Redistribution of Income. Inequality and the Redistribution of Income. Inequality and Poverty. Inequality and poverty. Types of inequality size distribution of income functional distribution of income distribution of income by recipient distribution of wealth

tomgiles
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Inequality and the Redistribution of Income

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  1. Inequality and theRedistribution of Income

  2. Inequality and theRedistribution of Income Inequality and Poverty

  3. Inequality and poverty • Types of inequality • size distribution of income • functional distribution of income • distribution of income by recipient • distribution of wealth • Poverty: absolute and relative

  4. Inequality and poverty • Measuring the size distribution of income • Lorenz curves

  5. Lorenz curve 100 80 Line of complete equality 60 Percentage share of national income (cumulative) 40 20 O O 100 60 80 20 40 Percentage of population

  6. Lorenz curve 100 80 Line of complete equality 60 Percentage share of national income (cumulative) 40 Lorenz curve 20 O O 100 60 80 20 40 Percentage of population

  7. Inequality and poverty • Measuring the size distribution of income • Lorenz curves • Gini coefficients

  8. Gini coefficient = A / (A + B) A B Lorenz curve and Gini coefficient 100 80 Line of complete equality 60 Percentage share of national income (cumulative) 40 Lorenz curve 20 O O 100 60 80 20 40 Percentage of population

  9. x Lorenz curve: UK households’ pre-tax incomes: 2009/10 100 Gini coefficient = A/(A+B) = 0.37 (or 37%) 80 60 Percentage share of national income (cumulative) A 40 B 24.2 Lorenz curve 20 O O 100 50 60 80 20 40 Percentage of population

  10. Area X = area Y Y Country B X Country A Lorenz curves for two countries with the same Gini coefficient 100 80 60 Percentage share of national income (cumulative) 40 20 O O 100 60 80 20 40 Percentage of population

  11. Inequality and poverty • Measuring the size distribution of income • Lorenz curves • Gini coefficients • ratios of shares of quantile groups

  12. Ratio of income shares of bottom 40% to top 20%of households (after taxes and benefits) Source: based on data from World Development Indicators database (World Bank, 2011)

  13. Inequality and poverty • Distribution in the UK • size distribution

  14. Size distribution of UK income by quintile group of households: 2009/10 Bottom 20% Next 20% 3% 7% Middle 20% 14% Top 20% 51% 24% Next 20% Income before taxes and benefits

  15. Size distribution of UK income by quintile group of households: 2009/10 Bottom 20% Bottom 20% Next 20% Top 20% 3% 6% Next 20% 7% 12% Middle 20% 14% 43% Top 20% 51% 16% Middle 20% 24% 22% Next 20% Next 20% Income before taxes and benefits Income after taxes and benefits

  16. Inequality and poverty • Distribution in the UK • size distribution • functional • by source

  17. Sources of UK household income as a percentage of gross household income Wages and salaries Investment income Income from self employment Other Pensions, annuities Social security benefits 1% 10% 2% 4% 6% 77% 1975 Source: based on data in Family Spending (National Statistics, 2010)

  18. Sources of UK household income as a percentage of gross household income Wages and salaries Investment income Income from self employment Other Pensions, annuities Social security benefits 1% 1% 10% 2% 13% 4% 7% 6% 3% 9% 67% 77% 1975 2009 Source: based on data in Family Spending (National Statistics, 2010)

  19. Sources of UK household income as a percentage of total household income by quintile groups: 2009

  20. Sources of UK household income as a percentage of total household income by quintile groups: 2009

  21. Sources of UK household income as a percentage of total household income by quintile groups: 2009

  22. Sources of UK household income as a percentage of total household income by quintile groups: 2009

  23. Sources of UK household income as a percentage of total household income by quintile groups: 2009

  24. Sources of UK household income as a percentage of total household income by quintile groups: 2009

  25. Sources of UK household income as a percentage of total household income by quintile groups: 2009

  26. Inequality and poverty • Distribution in the UK • size distribution • functional • by source • by occupation

  27. Average gross weekly earningsof UK full-time adult employees (£): 2010 Source: Annual Survey of Hours and Earnings (National Statistics, 2011)

  28. Inequality and poverty • Distribution in the UK • size distribution • functional • by source • by occupation • inequality by person/household type • household composition

  29. Weekly income for different types ofUK households (£): 2008 One adult (not retired) One adult, two or more children One man, one woman (not retired) Two adults, four or more children Source: based on data in Family spending (National Statistics, 2010)

  30. Inequality and poverty • Distribution in the UK • size distribution • functional • by source • by occupation • inequality by person/household type • household composition • by sex

  31. Average gross hourly earnings for full-time adult UK employees (£ per hour): 1970–2010

  32. Average gross hourly earnings for full-time adult UK employees (£ per hour): 1970–2010

  33. Average gross hourly earnings for full-time adult UK employees (£ per hour): 1970–2010

  34. Average gross hourly earnings for full-time UK employees on adult rates (2010)

  35. Average gross hourly earnings for full-time UK employees on adult rates (2010)

  36. Average gross hourly earnings for full-time UK employees on adult rates (2010)

  37. Average gross hourly earnings for full-time UK employees on adult rates (2010)

  38. Average gross hourly earnings for full-time UK employees on adult rates (2010)

  39. Average gross hourly earnings for full-time UK employees on adult rates (2010)

  40. Inequality and poverty • Distribution in the UK • size distribution • functional • by source • by occupation • inequality by person/household type • household composition • by sex • ethnic group • location

  41. Gross weekly household incomeSelected UK regions (£): 2009 Yorkshire & Humberside UK (average) North-East South East London Wales East Source: Family spending (National Statistics, 2011)

  42. Inequality and poverty • Distribution in the UK • size distribution • functional • by source • by occupation • inequality by person/household type • household composition • by sex • ethnic group • location • distribution of wealth

  43. Composition of UK net personal wealth: 2009 Source: Based on Table 5 of Social Trends: Income and Wealth data tables(National Statistics, 2011)

  44. Size distribution of UK wealth Source: Based on Table 13.5 of HM Revenue and CustomsNational Statistics(www.hmrc.gov.uk/stats/), 2008.

  45. Size distribution of UK wealth Source: Based on Table 13.5 of HM Revenue and CustomsNational Statistics(www.hmrc.gov.uk/stats/), 2008.

  46. Inequality and poverty • The causes of inequality • inequality of wealth • inequality in income, caused by differences in workers’ • ability; qualifications • attitudes • hours worked • economic power • qualifications

  47. Inequality and poverty • The causes of inequality cont. • differences in demand for goods • differences in household composition • discrimination • degree of government support • unemployment • Government attitudes towards inequality • the political right • the political left • concerns about the trade-off between efficiency and equality

  48. Inequality and theRedistribution of Income Taxes and Benefits

  49. Taxes and benefits • Role of taxes and benefits • redistribution of income • achievement of social efficiency • macroeconomic management • Types of tax • direct taxes • indirect taxes

  50. Balance of taxation in selected countries (2009)

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