Distribution of Income & Wealth - Unit 3 (AQA)

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  • Created on: 22-01-13 19:25
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Economics ­ The distribution of income & wealth:
The Distribution of Income & Wealth
Definition = the stock value of assets ­ It can be divided into marketable wealth & non-
marketable wealth
Marketable wealth = that which can be transferred between individuals e.g. property
Non-marketable wealth = cannot be transferred between individuals e.g. life assurance
Distribution of wealth can be broken down among the population as a whole, between
particular groups and the various types of wealth...
The distribution of wealth among the population:
Wealth has a tendency to be more unequally distributed than income in the UK
The UK's distribution of wealth has become more unequal between 1986 and 2003
Wealth distribution between different types of assets:
Wealth can be held in a variety of different forms including; pension rights, property,
shares, art, wines, bank deposits and cash
Non-marketable wealth such as life assurance & pension fund holding has
traditionally accounted for over 1/3 of all household wealth
Non-marketable wealth is also more evenly distributed than marketable wealth
including property rights, shares and bank deposits
The proportion of wealth held in property is liable to fluctuation over time resulting
from the changes in house prices
Wealth distribution between different groups:
Wealth tends to be skewed towards older age groups
Older people have more time to build up savings and other forms of wealth than
younger people
Sources of Wealth:
Inheritance ­ The main route to wealth, assets such as property can be accumulated
over generations with each successive generation being wealthier than the previous
Savings ­ This is easier for high income earners and for older people (more time to

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Entrepreneurship ­ People taking risks and successfully building up a business
Chance ­ Numerous `instant millionaires' are made each year through winning the
lottery or premium bond holdings
The causes of wealth inequality:
Inheritance ­ Keeps wealth within one family (passed down through the generations)
Marriage ­ Wealthy people tend to marry other wealthy people = creates wealth
among a few people
Income inequality ­ High earners can better save and earn interest ­ those who save
more build up higher wealth
Chance ­ The…read more

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The percentage of single parent families has increased which means more people are
either not in work or only work part-time
The causes of income inequality between households:
Impact of the state ­ A pure free-market system would not provide any welfare
benefits, whilst income differentials, particularly between those who can and can't
work are likely to be very significant ­ Government intervention should aim to
narrow such differentials
Wealth Inequality ­ Wealthier households can earn income from dividends, interest
etc.…read more

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Methods of Intervention:
The following are ways in which Governments can influence income & wealth distribution
in society...
Progressive taxes take a higher percentage of the income or wealth of the rich to
make the distribution more equal
Regressive taxes such as V.A.T.…read more


Sophie Price

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