• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Inequality in the UK.

Extracts from this document...

Introduction

Inequality in the UK The Oxford English Dictionary defines inequality as "the quality of being unequal or uneven". The instance of being unequal may arise from the disparity of distribution or opportunity and spans all social dogmas including: gender, race, political or religious persuasion. There are many forms of measuring inequality wealth, consumption and opportunity but there are problems inherent in each. Perhaps the most effective way of measuring inequality is comparing income earned, as there is sufficient raw data, it is easily conceptualised and it does not entail normative statements or value judgements. The most widely used measure of income inequality in society is the Gini co-efficient. It is a precise way of measuring the position of the Lorenz curve (see diagram below), a graph that shows, for the bottom x% of households, the percentage y% of the total income which they have. To compute the Gini Coefficient, the area between the Lorenz Curve and the 45 degree equality line is measured. This area is divided by the entire area below the 45 degree line (which is always exactly a 1/2). The quotient is the Gini coefficient, a measure of inequality, expressed as a percentage or as the numerical equivalent of that percentage, which is always between 0 and 1. The higher the figure for the Gini co-efficient, the greater is the degree between high and lower income households. ...read more.

Middle

Therefore, households partly or wholly dependent on welfare assistance see their relative incomes fall over time. Those who are unemployed must rely on these state handouts and subsequently they fall further behind those employed in terms of income levels. Twice since 1980, mass unemployment has affected Britain resulting in a large rise in relative poverty. To compound this income tax rates have fallen, specifically those targeting high income earners; during the 1980's the top rate of tax was cut from 80% to 40%. These tax reductions have worsened relative poverty as people in work are able to keep a higher proportion of what they earned. Ultimately cuts in any form of direct taxation will tend to disproportionately favour the better off. Other factors that affect inequality in society include the composition of the household. Although an individual may be a high income earner, supporting a large family will mean the income per person in the household is relatively low. Conversely a household where all members of the family are earning a wage despite the fact it is low may have a high household income. Subsequently inequalities differ depending on whether they are being measured per individual or per household. Generally it is accepted by the government that income inequality constitutes market failure as the market mechanism produces an allocation of resources which is sub optimal. ...read more.

Conclusion

Essentially free market economists claim that redistribution policies employed by the government will lead to increased unemployment which will inevitably lead to lower economic growth. They argue that income inequality cannot be improved without producing significant negative effects on the National economy and therefore reason it is impractical to narrow the gap between poor and rich. Instead they argue that income differentials should be widened through low taxation, minimal government legislation in the private sector and the bare minimum of state provision, in order to improve the welfare of those less fortunate in society i.e. to improve poverty. Although the poor may lose out in state benefits they will be more than compensated through increased growth which in theory should 'trickle down' from the better off in society to the less fortunate. Although inequality rises it can be argued that being better off is a matter of absolute quantities rather than relative quantities. Through this theoretical mechanism a system is created where wealth in society will benefit not just the rich but also the poor, particularly those who are unable to work. As it can be seen from free market theory inequality is not necessarily a bad thing, but rather it acknowledges that poverty, a symptom of inequality must be addressed. However it must be questioned whether the use of increased economic growth to tackle poverty is sustainable or indeed viable. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. The Quest for Optimal Asset Allocation Strategies in Integrating Europe.

    In the literature, national stock markets are defined to be completely integrated if investors face only common EU-wide risk factors and price them identically. Markets are said to be partially integrated if, in addition to common-EU wide factors, investors face country specific factors and price them both.

  2. Is the Welfare State Desirable?

    Moreover, Macbeth only had thoughts of becoming king, but he did not wish of ever killing Duncan, he had too many good values and had too good of a nature: "But without the illness that should attend it"; Macbeth never had the ability to carry out the murder.

  1. An Empirical Investigation into the Causes and Effects of Liquidity in Emerging

    Therefore, in order to better estimate the relationship and incorporate a number of explanatory variables, the single equation approach is extended to a multivariate framework. The Johansen technique (Johansen 1988) is used in order to do this. Firstly a vector is designed, allowing all of the variables to be potentially

  2. Measurement of National Income, Strengths and Weaknesses of National Income Statistics.

    receipts from foreigners that correspond to goods and services produced abroard using factor inputs supplied by domestic sources. To convert from GDP to GNP you must add factor input payments to foreigners that correspond to goods and services produced in the domestic country using the factor inputs supplied by foreigners

  1. Living Wage

    However, he went on to say that if, through necessity, a worker accepts a wage that provides less than reasonable and frugal comfort, the worker is the victim of force and injustice. This is a situation which faces so many workers especially in developing countries such as ours.

  2. Developing and comparing of two economic profiles: Poland/Hungary (for the 1990s)

    to be better performed by public rather include education, health service, the postal service road and railway system, social statistical reporting and, of course, national defense. In this market economy system, economic forces are free of someone's control, supply and demands build up the price of goods and services.

  1. Investigate if the UK would benefit by adopting the single currency, and if so ...

    As a single currency would be circulating in the community having replaced the various national currencies, companies and individuals would no longer have to transfer between currencies as they make purchases or invest in countries around the EU. Interest rates could be lower.

  2. Retailing In India - A Government Policy Perspective

    Consumer research shows that households in metropolitan cities are gravitating towards supermarkets and other modern retail channels. On the supply front, a number of organized retailers have entered the trade in the last 5 years. These include large Indian business groups such as the Tatas, RPG, the Rahejas and Piramal, as well as MNC brands in apparel, footwear and durables.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work