- Income inequality
- Income inequality is when one group receives a disproportionate share of total income or wealth compared with others.
- Poverty
- Poverty is the situation of being below a certain level of income one needs for a basic standard of living.
Causes of income and wealth inequality
Can you name four causes of income and wealth inequality within a country?
Each one widens the gap between households without anyone breaking a rule.
Wages differ between jobs, and the pay of high-skilled workers has risen faster than that of low-skilled workers as demand for skills outran supply.
Can you think of an example?
New software lets one data analyst do far more, so firms bid up analysts' pay while pay in warehouse work barely moves.
High earners increasingly form households with other high earners, while more households depend on a single, often low, income.
Can you think of an example?
A doctor married to a solicitor brings two large salaries into one household; a single parent working part-time brings one small one.
Wealth passed down from parents gives some people large assets at the start of adult life that others of equal talent and effort lack.
Can you think of an example?
Two graduates earn the same salary, but one inherits a flat and pays no rent, so their savings and wealth pull further apart every year.
Most people earn little in their first jobs, more by middle age and less after retiring, so a single year shows gaps that lifetimes do not.
Can you think of an example?
A trainee on a starting salary and a senior manager near retirement may be the same person, three decades apart, on the same career path.