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income distribution

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Introduction

Explain Why the Distribution of Income is Unequal in the UK. Income is a flow of earnings generated and received over a given time period. It can be gained from employment, pension funds or ownership of wealth. Between 1979 and 1990, the UK economy experienced a marked increase in income inequality. However, since 1997 when labour came into power, their social reforms such as tax credits and national minimum wage has narrowed that gap slightly. Although the gap still exists from a series of factors. A rise in earnings inequality can cause income inequality. ...read more.

Middle

Over the years there has also been a rise in workless households where there is no income earner and are thus living off welfare benefits. Unemployment of unskilled and semi-skilled labour and generally being unemployable has caused this. Another reason is due to the benefit culture where the income into the household would be less if they worked than if they lived off benefits, due to taxes etc, therefore, it is more beneficial for them to stay on benefits. Health issues such as drug and alcohol abuse is also another factor contributing to this. ...read more.

Conclusion

Direct taxes are progressive (a higher proportion is paid as income rises, which is thought to be fair) and indirect taxes are regressive (a higher proportion is paid as income falls). Therefore when Thatcher raised VAT which is an indirect tax, this contributed further to the widened gap of income distribution. Therefore, I believe that the most significant cause of income inequality was the change in the UK tax structure in 1979, as this has affected everyone in the UK and thus contributed greatly to income inequality. However this inequality will always exist as it is an incentive to work and earn more. ...read more.

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Here's what a star student thought of this essay

3 star(s)

Response to the question

This essay engages at an okay level, as it picks up on some of the key points, but doesn't elaborate and analyse enough. For example, it discusses how a rise in earnings inequality causes inequality. This is quite obvious, so ...

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Response to the question

This essay engages at an okay level, as it picks up on some of the key points, but doesn't elaborate and analyse enough. For example, it discusses how a rise in earnings inequality causes inequality. This is quite obvious, so I would've liked to have seen some analysis of wage determination theories. For example, this would be a great opportunity to explore MRP (marginal revenue product) and discuss that higher-skilled jobs have higher MRP due to integrated training with their jobs, and so their income has increased more than low-skilled jobs where this is absent. Elaborations like this would drive this essay to higher marks.

Level of analysis

The analysis in this essay has potential. I liked how they made clear that income is a flow of money, as this is often not explained in essays when it is an easy way to pick up marks! Not to be confused with wealth which is a stock of money. It is able to pick up on the main points: unemployment, low-skilled jobs and regressive taxes. However, these points are not clinically analysed. As mentioned above, the discussion of people having high-skilled jobs and other having low-skilled jobs could be detailed with an MRP diagram. I did like the context used when discussing that benefits follow inflation, but wages tend to increase by more than inflation. However, this could be elaborated upon, saying that although this is the case, benefits are much lower than employment earnings in general. A discussion of hysteresis and long term unemployment would be useful here, saying that households struggle to get back into work once out of a job for a long period. I did like the social argument revolving around unemployment, as this shows good awareness beyond economics. When talking about inequality, it is vital to discuss the Lorenz curve and Gini coefficient. This essay draws upon changes made by Thatcher, so it would be useful to explore whether these changes increase inequality, which could be done through an analysis of the changes in the Gini coefficient. There is some evaluation in the conclusion, saying that inequality causes incentives. I think this is an interesting concept, and would question whether it's the other way round. Incentives to become entrepreneurs mean that income isn't distributed evenly through the capitalist system, thus causing inequality. Mankind don't have the same human capital, so there is inequality wherever you look.

Quality of writing

The essay has a clear structure, with an introduction and conclusion. I would've liked to have seen a stronger introduction, as "the gap still exists" hasn't been properly explained and only asserted. I would be questioning "what gap?" whereas it would only take a sentence to explain the inequality. The conclusion includes the first person, which I advise strongly against. This is because it suggests that your argument is opinion based using phrases such as "I think". It is much more sophisticated to say "it is clear that" or "the evidence suggests" to show that an argument is built upon clear analysis. Other than that, spelling, punctuation and grammar are strong.


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Reviewed by groat 02/03/2012

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