The distribution of income and wealth: poverty and inequality

This topic examines how income and wealth are distributed across the population, focusing on the causes and consequences of inequality and poverty. In AQA A-Level Economics, you will explore measures such as the Lorenz curve and Gini coefficient, the distinction between income (a flow) and wealth (a stock), and the difference between absolute and relative poverty. Understanding these concepts is crucial for evaluating government policies aimed at redistribution, such as progressive taxation, welfare benefits, and minimum wage legislation.

Inequality and poverty are central to macroeconomic performance and social welfare. High inequality can reduce social cohesion and economic growth, while poverty limits individuals' capabilities and opportunities. The topic connects to labour markets (wage determination), fiscal policy (tax and benefit systems), and market failures (e.g., imperfect information, public goods). You will need to analyse data, evaluate policies, and discuss trade-offs between equity and efficiency—a key theme in economics.

Mastering this topic requires applying economic models to real-world data, such as UK income quintiles or global Gini coefficients. You should be able to explain why inequality has risen in many developed countries (e.g., skill-biased technological change, globalisation) and evaluate policies like the National Living Wage, Universal Credit, or wealth taxes. This knowledge is essential for essays on macroeconomic objectives and government intervention.