"outine TWO reasons that could explain inequality of income within a nation" (1 Viewer)

[saves.the.day]

This was taken from the 2001 HSC had me completley stumped. I did not know which dot point it was covering. The closest dot point would probably be dimensions and trends but I doubt it would ask that.

Just wanted to know how you should answer this because this is really got me.

How I'd answer it
Personally, I'd talk about a regressive tax system and talk about marginal rates of tax falling as taxable income increases for the first reason which will see a greater proportion of lower income earners get taxed more.

For the next reason, I'd talk about microeconomic reform, encouraging efficiency and structural change resulting in a "user pays" environment causing a increase in the inequality of income distribution.

Ok that seems pretty valid *to me* but those responses would cover dot points from other cores I guess. Well if anyone could tell me the correct answer or point me in the right direction, I'd really appreciate that.

Thankyou very much.

 

[timmii]

The nature of the taxation system
Differing levels of skills amongst workers (and hence different remunerations)
The nature of the social security system
Stability/relaibility of the financial system - wealthier people can afford to save funds overseas, while the middle class/lower classes earn lower rates of interest, have to deal with defaults etc...(think african countries with next to no financial infrastructure).

 

[TastesGoodBut]

two reasons that EXPLAIN income inequality

well its basically asking for causes as far as i know...

so i would say sumthing like:

1) income and wealth are related, because wealth builds income, therefore those with more wealth will have higher incomes and hence can purchase more wealth and the cycle continues (sumthing like that.... maybe talk about the share price booms distorting equality by giving those with higher incomes which have bought shares more income from the investment)

2)the relationship with employment. those who are employed get more incomes and with micro reform it has seen wages tied with skills. the unemployed have less skilss, and even if they do retraining htey will lack experience so their incomes will be lower. despite the progressive tax system it helps equalitate income but not to any great extent


sumthing like that

ur approach was a little wrong... carefully read the question!

 

[symo]

i put:

1) decentralised wage determination system - enterprise bargaining. some can increase their wages more than others, ie CAs vs Awards

2) wealth - inherited wealth: as wealth provides income ie rent + profit, thus allowing those with inherited with to be more advantaged in the quest for increased income, thus inequality

income tax is progressive (relatively), but u could argue the extend of progressive-ness

yeah, micro - strucutal change - structural u.e targets low income + skilled workers vs advantaging high skilled adaptable workers, therefore inequality

 

[AGB]

1) Differences in the level of skills - individuals who are less skilled are likely to earn lower incomes than those who have higher qualifications

2) Unemployment - those who are unemployed will be receiving less income than those who are employed, thus creating inequalities in the distribution of income

 

[AGB]

damn!! i thought i was gonna be really smart and post the first answer..............

 

[saves.the.day]

Wow thanks for your huge response everyone. And who said economic students were stingy? they better take that back.

You guys rock.