http://www.tutor2u.net/blog/index.php/economics/ en tutor2u.net Copyright 2012 2012-02-12T07:41:03+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-richard-wilkinson-on-inequality-and-economic-harm http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-richard-wilkinson-on-inequality-and-economic-harm#When:08:05:36Z I have been using this talk given at TED 2011 by Richard Wilkinson when teaching the topic of poverty and inequality and the risks that a growing chasm between low and high income groups can have for society and economic performance. Students and teachers familiar with the work of Pickett and Wilkinson and their recent book “The Spirit Level” will know well the approach that these authors take. They use published data on inequality and link to wide differences in a range of economic and social outcomes. Their work has been criticised by many on the right, not least because their argument is strong and clear - namely that we need to reduce inequality to tackle some of society’s deepest and most corrosive problems. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 2, A2 Micro, AS Macro, Poverty and Inequality, Standard of Living, Teaching of Economics, 2012-02-05T08:05:36+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macrovideo-resources-on-human-development-data http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macrovideo-resources-on-human-development-data#When:22:10:37Z Here is a short collection of short video resources on measuring human development with specific reference to the annual human development report and to progress in improving welfare in countries such as Kenya and Brazil AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Emerging Economies, Development Economics, Brazil Economy, Economic Growth, Poverty and Inequality, Standard of Living, Teaching of Economics, 2012-01-31T22:10:37+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-the-economic-disaster-of-youth-unemployment http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-the-economic-disaster-of-youth-unemployment#When:16:45:27Z The official figures show that there are now more than one million young people counted as unemployed in the UK although the precise scale of the jobless crisis is difficult to measure accurately. Nonetheless, it represents a fundamental economic, social and political problem and one that policy makers must address. In this video report from Al Jazeerah, Lawrence Lee visits Leeds to find a well qualified nineteen year old with good qualifications but who cannot afford to go to university and is finding it tough to win a place in the police force - his main ambition. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Market Failure, Factor Immobility, Poverty and Inequality, UK Economy, Unemployment, 2012-01-28T16:45:27+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-focus-on-china-per-capita-incomes http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-focus-on-china-per-capita-incomes#When:21:07:18Z Per capita incomes in China are rising though still low by advanced-nation levels. China ranks at 119 in terms of average incomes, according to World Bank data (per capita incomes, PPP adjusted). But China is now the biggest car market in the world and there has been a huge rise in the sales of luxury goods to China (these products have a strong income elasticity of demand).  China wants to achieve a re-balancing of her growth – towards domestic consumption and away from exports. Another key aim of the plans for the next 5 years is a surge in market-driven entrepreneurial activity. Plus a continued shift towards higher-value, high-knowledge manufactured products. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Emerging Economies, China Economy, Cycles and Shocks, Aggregate Demand, Global Economy, International Trade, Poverty and Inequality, Standard of Living, 2012-01-26T21:07:18+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-population-shift-in-china http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-population-shift-in-china#When:16:27:44Z What happened in the UK in 1851, the United States in 1920 and in the World in 2008? These three years mark the estimated year when the size of a given urban population overtook the size of the rural population. And now China has reached this significant landmark. The Chinese Bureau for National Statistics reported recently that in 2011, the proportion of urban population reached 51.27 percent (1.3% higher than in 2010) with the urban population standing at 690.79 million persons, an increase of 21 million persons in a year. China’s rural population stood at 656.56 million persons and for the first time her urban population was 34.23 million persons more than the rural population. Click below for some study / teaching resources: AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Emerging Economies, Development Economics, China Economy, Cycles and Shocks, Aggregate Supply, Demography, Economic Growth, Global Economy, Poverty and Inequality, Standard of Living, 2012-01-23T16:27:44+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/video-resources-on-rising-inequality http://www.tutor2u.net/blog/index.php/economics/comments/video-resources-on-rising-inequality#When:10:24:14Z In this blog entry we will be bringing together some short video resources that might be useful when teaching and studying the economics of inequality. Please do add some more resources using the comment box at the bottom and we can add them to the listing. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 2, A2 Micro, AS Micro, Government Intervention, Market Failure, Poverty and Inequality, Standard of Living, Teaching of Economics, UK Economy, Regional Economics, 2012-01-23T10:24:14+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-living-below-the-breadline http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-living-below-the-breadline#When:00:12:49Z This article on the appalling depth of workless households in Liverpool is a reminder of the multiple aspects of relative poverty and economic/social exclusion. The causes of unemployment are complex - many are structural - but it is hard to draw much if any optimism from reading this article. By some estimates over one third of households in Liverpool have no one in work and second and third generation unemployment is not uncommon. This is a must article for students to read if they want a better awareness of the human cost of non-employment. Read: Below the breadline on Liverpool’s workless estates AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Labour Market, Macroeconomic Policies, Supply-side policies, Market Failure, Factor Immobility, Poverty and Inequality, Teaching of Economics, UK Economy, Regional Economics, Unemployment, 2012-01-20T00:12:49+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/newsnight-on-rebalancing-the-uk-economy http://www.tutor2u.net/blog/index.php/economics/comments/newsnight-on-rebalancing-the-uk-economy#When:05:11:19Z Last night’s edition of Newsnight should be required viewing for all AS and A level economists - and it is a huge shame that it is only available on i-player for another 7 days. Introduced on the shock news that even Tesco is vulnerable to the downturn, it included reports from Andrew Verity looking at whether the British economy will ever wean itself off shopping and the City, and an excellent (and all-female!) discussion including Deborah Meaden and the FT’s Gillian Tett. Try challenging your students to watch and listen to this while noting down every aspect of the syllabus which is mentioned or referred to - that will keep them busy! There was also a debate between Employment Minister Chris Grayling and disability campaigner Sue Marsh about the government’s welfare reforms, defeated in the House of Lords the night before, and finally Tokyo correspondent Roland Buerk looking at Japanese economic stagnation of the late 1980s and 90s, to consider whether it was a “lost decade” and what could be learnt from it. A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Economic History, Economic Growth, Global Economy, Government Intervention, Macroeconomic Policies, Manufacturing Industry, OECD Economies, Japan Economy, Poverty and Inequality, Standard of Living, Teaching of Economics, UK Economy, Unemployment, 2012-01-13T05:11:19+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-a-world-of-seven-billion-people http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-a-world-of-seven-billion-people#When:16:37:16Z Fergus Walsh from the BBC provides this really clear video info graphic on the expanding global population estimated to have exceeded seven billion during 2011 and forecast to rise to eight billion by 2025. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, A2 Micro, AS Micro, Emerging Economies, Demography, Poverty and Inequality, 2011-12-30T16:37:16+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-development-issues-the-baby-boom-in-zambia http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-development-issues-the-baby-boom-in-zambia#When:16:33:41Z In this special report from BBC reporter Fergus Walsh, the rapid population growth in the African country of Zambia is examined. Population growth in the country is so quick that it could perpetuate deep poverty in the country despite relatively fast growth in recent years. In Zambia, the UN predicts that the population could triple by 2050, reaching 100 million by the end of the century. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, AS Macro, Emerging Economies, African Economy, Demography, Economic Growth, Poverty and Inequality, Standard of Living, Teaching of Economics, 2011-12-29T16:33:41+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/great-blog-to-follow-joseph-rowntree-foundation http://www.tutor2u.net/blog/index.php/economics/comments/great-blog-to-follow-joseph-rowntree-foundation#When:12:33:53Z If you are at all interested in the latest research findings in the domains of poverty, inequality, economic and social exclusion and the social impact of government policies, the Joseph Rowntree Foundation website is highly recommended. In this particular blog the JRF provide a revealing list of things that they have found during the course of 2011 - there is some excellent background evidence here for AS and A2 students wanting data to support their work on poverty and inequality and social trends in the UK. You can also follow the JRF on Twitter - use this link AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Poverty and Inequality, Standard of Living, Teaching of Economics, Teaching Opportunities, UK Economy, 2011-12-22T12:33:53+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/inequality-data http://www.tutor2u.net/blog/index.php/economics/comments/inequality-data#When:08:44:01Z Courtesy of the Greg Mankiw blog, I have found a tool which enables users to generate data series for a range of countries and indicators of inequality.Courtesy of the Greg Mankiw blog, I have found a tool which enables users to generate data series for a range of countries and indicators of inequality. Poverty and Inequality, Standard of Living, 2011-11-16T08:44:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-americas-hour-glass-economy http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-americas-hour-glass-economy#When:20:31:58Z Here is a revealing three minute video on the challenges facing America’s declining middle class. Falling real incomes, rising living costs, deep structural unemployment problems - moving on up has got harder to do - what are the social effects of this across so many states? AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, OECD Economies, US Economy, Poverty and Inequality, Standard of Living, Teaching of Economics, 2011-11-09T20:31:58+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-should-tncs-make-full-disclosure-on-factory-wages http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-should-tncs-make-full-disclosure-on-factory-wages#When:17:05:41Z Peter Day’s World Business programme on BBC this week is an evocative report on the travels of two people who have explored where we get most of the clothes and the shoes adorned with global brands. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, Emerging Economies, Development Economics, Business Economics, Environmental Economics, Global Economy, Market Failure, Poverty and Inequality, Standard of Living, Teaching of Economics, 2011-10-30T17:05:41+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-uk-executive-pay-all-in-it-together http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-uk-executive-pay-all-in-it-together#When:09:55:00Z At a time when millions of people are taking nominal or real pay cuts, the news that chief executives of FTSE-100 companies have seen their earnings rise by 43% in the last year is particularly difficult to stomach. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 1, A2 Micro, AS Micro, Business Economics, Government Intervention, Labour Market, Trade Unions, Poverty and Inequality, Teaching of Economics, UK Economy, 2011-10-29T09:55:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/top-10-resources-on-inflation-on-youtube http://www.tutor2u.net/blog/index.php/economics/comments/top-10-resources-on-inflation-on-youtube#When:12:37:22Z What follows is a list of the ten video clips I use when teaching inflation as a topic. They are a mixed bunch. Some are useful for class use, others work as pointers to a series of video clips from one producer. What I’ve tried to avoid, however, are links to the teach yourself Economics resources (though obviously they have their place) that are out there. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, OCR AS Economics Unit F582, A2 Macro, AS Macro, Emerging Economies, Development Economics, Inflation and Deflation, Macroeconomic Policies, Monetary Policy, Monetarism, Poverty and Inequality, Teaching of Economics, Fun Friday, 2011-10-26T12:37:22+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/tour-of-the-us-income-distribution-the-l-curve http://www.tutor2u.net/blog/index.php/economics/comments/tour-of-the-us-income-distribution-the-l-curve#When:07:52:08Z Everyone knows about the Lorenz Curve but with the OWS events of late I came across the ‘L Curve”. The red line represents a graph of family income across the population. The height of the curve at any point is the height of a stack of $100 bills equalling that income. On the scale of the football field graph shown here the bottom 99% of the population measure their incomes in inches.  The top 1% measure their incomes as stacks of $100 bills feet or even miles high!  The total wealth of the few people in the vertical spike equals the total wealth of the rest of the population combined. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, OCR A2 Economics Unit F585, A2 Micro, AS Micro, Emerging Economies, OECD Economies, US Economy, Poverty and Inequality, Standard of Living, Teaching of Economics, 2011-10-25T07:52:08+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-economists-attack-food-price-speculation http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-economists-attack-food-price-speculation#When:08:36:54Z Food prices are now rising by up to 10% a year in Britain and Europe and a new forecast from the United Nations predicts that prices can be expected to rise at least 40% in the next decade. Whilst conventional theories of changes in supply and demand conditions can be used to explain some of the increase in food prices, many economists are concerned that speculation by hedge funds and other investors has amplified the natural volatility of prices driving food prices away from fair values and contributing to a huge rise in global food poverty and hunger. These days, cocoa, fruit juices, sugar, staples, meat and coffee are all now global commodities, along with oil, gold and metals. Is this the moment to legislate to limit the scope for speculative activity in food markets? The video below provides an excellent introduction to speculation in food markets - it features Neil Kellard, Professor in Finance at the University of Essex AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, OCR A2 Economics Unit F585, AS Micro, Agriculture, Balance of Payments, Emerging Economies, Development Economics, Commodities Markets, Economic Growth, Financial Markets, Government Intervention, Buffer Stocks, Poverty and Inequality, Market Equilibrium and Price, Price Mechanism in Action, Price Volatility, Teaching of Economics, 2011-10-24T08:36:54+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-a-widening-regional-divide-in-life-expectancy http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-a-widening-regional-divide-in-life-expectancy#When:17:23:20Z Life expectancy in the United Kingdom continues to improve. But one important aspect of the deep and structural divide in incomes, economic activity and status and health across different groups in Britain is the marked variation in average life expectancy for men and women. The UK Statistics Commission has just published new data on this covering the period 2004-2010 and finds that: AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Supply, Demography, GCSE Economics, Health Economics, Poverty and Inequality, Standard of Living, Teaching of Economics, UK Economy, Regional Economics, Unemployment, 2011-10-19T17:23:20+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-world-food-day http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-world-food-day#When:19:33:04Z Here is one of the short information videos launched by the World Bank on the occasion of World Food Day - excellent as an introduction to the economics of high and volatile world food prices. Every night, 1 billion people go to bed hungry because food is too expensive. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 4, EdExcel Economics Unit 1, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, A2 Micro, AS Macro, AS Micro, Agriculture, Emerging Economies, Development Economics, Commodities Markets, Global Economy, Government Intervention, Buffer Stocks, Market Failure, Poverty and Inequality, Standard of Living, Teaching of Economics, 2011-10-16T19:33:04+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-monospony-power-and-low-wages-in-care-homes http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-monospony-power-and-low-wages-in-care-homes#When:05:46:37Z An October 2011 edition of Panorama from the BBC investigates low pay and poor working conditions for thousands of people struggling to earn a decent living in the care homes sector. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 1, A2 Micro, Government Intervention, Minimum Prices, Labour Market, Trade Unions, Poverty and Inequality, Teaching of Economics, 2011-10-04T05:46:37+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-interest-rates-and-income-inequality http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-interest-rates-and-income-inequality#When:20:53:00Z Changes in interest rates on loans and savings deposits across an economy can have - over time - a sizeable effect on the overall distribution of income and wealth in a country. Since March 2009 official policy interest rates in the UK economy have been held at an historic low of 0.5%. New research from the Bank of England indicate that this lengthy period of ultra-low returns for savers has caused a dramatic redistribution of income away from savers towards borrowers, especially those on variable-rate mortgages. The Bank of England suggest that savers have lost more than £40bn because of low interest rates since the spring of 2009, but those losses are mirrored by dramatic gains, amounting to more than £50bn, for mortgage borrowers who have paid less in interest on their loans during the same period. This video from BBC news provides some extra background. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Cycles and Shocks, Macroeconomic Policies, Monetary Policy, Poverty and Inequality, 2011-09-16T20:53:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-economic-growth-and-inequality http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-economic-growth-and-inequality#When:20:48:01Z Not all of the benefits of growth are evenly distributed. A rise in real GDP can often be accompanied by widening income and wealth inequality in society that is reflected in an increase in relative poverty. “Although economic growth in China has created vast wealth for some, it has amplified the disparities between rich and poor. Although the average wealth per Chinese citizen was $17,126 - almost double that of other high growth economies such as India - median wealth was just $6,327. In 2010, China’s Gini-coefficient stood at 0.47. Inequality in China has now surpassed that in the United States.” Source: Dr Damian Tobin School of Oriental and African Studies AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Emerging Economies, Development Economics, China Economy, Economic Growth, Global Economy, Macroeconomic Policies, Poverty and Inequality, 2011-09-14T20:48:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-income-and-wealth-in-the-uk http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-income-and-wealth-in-the-uk#When:20:29:00Z In Unit 2 economics it is important to distinguish between flows of income and stocks of wealth. This revision note looks at this topic and the scale of income inequality in the UK. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Poverty and Inequality, 2011-09-12T20:29:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-inequality-and-development http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-inequality-and-development#When:17:10:00Z The September 2011 edition of the IMF’s Finance & Development magazine focuses on developments in inequality and the impact of the widening gap between rich and poor on development programmes and growth. The headline article is by Branko Milanovic who looks at changes in income inequality over the last twenty-five years. A rich resource for students and teachers wanting updates on this key aspect of globalisation. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, Emerging Economies, Development Economics, Economic Growth, Global Economy, Poverty and Inequality, Teaching of Economics, 2011-09-12T17:10:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/starter-video-the-slums-of-manilla http://www.tutor2u.net/blog/index.php/economics/comments/starter-video-the-slums-of-manilla#When:14:56:00Z I have used this remarkable 14 minute report from Paul Mason from BBC Newsnight in both my AS and A2 teaching. It prompts plenty of discussion about housing as a need (and a want) and whether the continued existence and growth of informal settlements (slums) is sustainable and preferable to state spending on slum clearance. Geography students (most of whom will study the economic geography of slums) see many connections with economics. The report is superbly edited and ties in well with lessons on concepts of absolute and relative poverty and the extent to which forces of globalisation are driving millions more poorer people away from rural areas into the slums. Colleagues with IWBs who want to bring up relevant background information on the economy of the Philippines might want to make use of the Timetric data page for this country. Here is the link. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 4, EdExcel Economics Unit 1, EdExcel Economics Unit 4, A2 Macro, AS Micro, Emerging Economies, Development Economics, Environmental Economics, Global Economy, Poverty and Inequality, Teaching of Economics, 2011-09-11T14:56:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/childcare-cost-means-that-working-doesnt-pay http://www.tutor2u.net/blog/index.php/economics/comments/childcare-cost-means-that-working-doesnt-pay#When:09:08:00Z I don’t think this dilemma is anything new, but Aviva’s Family Finance Report presents some up-to-date figures which show how difficult it can be for working parents to fund the cost of the childcare that makes it possible for them to take a job. Based on average pay rates, they estimate that a parent of two children working full time would only keep £120 a month of their pay after paying all the costs associated with work, including travel as well as childcare, while those who take a part-time job may actually be £98 a month worse off. The trade-off faced by working parents if they decide to swap the unpaid role of full-time childcare at home for paid work outside the home, which necessitates paying for some other form of childcare, has always been an issue, but the gap between the gain in pay and the loss in costs seems to be getting more difficult to manage. The report also looks at costs for child-related expenses such as school trips, clothes and sporting activities which have risen by 6.9% over the past year. Compare this with the fall in family incomes estimated at 2% between May and August this year - and the strain on family budgets is very clear. This report goes on to give some more data about the burden of unsecured debt and the measures government is taking to try to make working a more affordable option for families, which will be useful when looking at government intervention to deal with the poverty trap and the distribution of income. A2 Macro, Government Intervention, Labour Market, Macroeconomic Policies, Supply-side policies, Poverty and Inequality, Standard of Living, 2011-09-04T09:08:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-rising-cost-of-the-minimum-standard-of-living http://www.tutor2u.net/blog/index.php/economics/comments/the-rising-cost-of-the-minimum-standard-of-living#When:05:34:00Z The Joseph Rowntree Foundation has just published its annual report into Minimum Income Standard for the UK, reported here by the BBC, and showing how much money is needed for an acceptable standard of living. They look at the effects of tax and benefits on the budgets for different family types to show the wage you need to earn in order to have enough to afford what ordinary members of the public (their definition) agree is needed to survive and take part in today’s society. AS and A2 Specifications, AQA Economics Unit 4, A2 Macro, Macroeconomic Policies, Poverty and Inequality, Standard of Living, Teaching of Economics, UK Economy, Recession Watch, Unemployment, 2011-07-05T05:34:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-fears-over-a-century-of-hunger http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-fears-over-a-century-of-hunger#When:08:19:00Z Nigel Cassidy reports in this video from BBC news on fears that the world faces “a century of hunger” if the international community cannot agree on new rules regarding food prices. Food security is a hugely important global economic, political and social issue and one of the best resources for keeping up to speed on this is the Guardian’s dedicated page of articles. Here is the link. Check the links at the bottom of the blog for past articles on this topic. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 4, EdExcel Economics Unit 1, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, AS Micro, Agriculture, Emerging Economies, Development Economics, Commodities Markets, Cycles and Shocks, Economic Growth, European Economy, EU Farming and Fishing, Global Economy, Government Intervention, Buffer Stocks, International Trade, Poverty and Inequality, Market Equilibrium and Price, Price Mechanism in Action, Price Volatility, Standard of Living, Teaching of Economics, 2011-06-22T08:19:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/chinese-inward-investment-in-the-london-property-market http://www.tutor2u.net/blog/index.php/economics/comments/chinese-inward-investment-in-the-london-property-market#When:08:40:01Z In mainland China, authorities have put restrictions on property speculators to dampen the market, while in Hong Kong prices have risen by 70% in less than two years. But the 25% depreciation of sterling over the last two years makes the London property market a real draw for property investors from China. Sky News reports that one in three of buyers of new properties in London come from China and Hong Kong, mainly in the £400,000 - £1mn bracket, either seeking accommodation for their children studying in London or simply an investment. If - or when - the sterling/dollar exchange rate recovers, their return will be enhanced by the increased return they could get when they take their money out of the UK market again. A2 Macro, AS Macro, Emerging Economies, China Economy, Exchange Rates, Housing Economics, Poverty and Inequality, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, UK Economy, Regional Economics, London Economy, 2011-06-12T08:40:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/development-econ-wealth-and-inequality-in-china http://www.tutor2u.net/blog/index.php/economics/comments/development-econ-wealth-and-inequality-in-china#When:07:16:00Z The BBC is running a special series of short reports on the chasm in wealth inequality in fast-growing China. One in a Billion looks at China’s new super rich. This set of video reports on Chinese development from Carrie Gracie (Nov 2010) is also worth looking at A portrait in miniature of China’s transformation AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, AS Macro, Emerging Economies, China Economy, Economic Growth, Poverty and Inequality, Teaching of Economics, 2011-06-10T07:16:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/poor-economics-esther-duflo-at-the-lse http://www.tutor2u.net/blog/index.php/economics/comments/poor-economics-esther-duflo-at-the-lse#When:17:40:00Z A summery hat tip to Jon Andrews from St Paul’s School for heading to the LSE this week and providing us with some personal reflections on the Esther Duflo lecture there. Teaching in the capital has its benefits; a notable one of these being the accessibility of a fantastic array of public lectures. The LSE public lecture programme provides an excellent opportunity to hear speakers on various topics from various backgrounds, some very relevant to the A level course. Last night the LSE hosted Abhijit Banerjee and Esther Duflo who came to discuss their book ‘Poor Economics’. Professor Banerjee is currently the Ford Foundation International Professor of Economics at MIT and Professor Duflo, also from MIT, is Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics. Both are highly influential, Duflo having been included within Fortune magazine’s ‘forty under forty’. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Emerging Economies, Development Economics, Global Economy, Poverty and Inequality, Teaching of Economics, 2011-06-03T17:40:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/key-as-micro-terms-poverty http://www.tutor2u.net/blog/index.php/economics/comments/key-as-micro-terms-poverty#When:18:05:01Z Key poverty concepts are defined here and we link to recent blog articles on these concepts Absolute poverty: Absolute poverty measures the number of people living below a certain income threshold or the number of households unable to afford certain basic goods and services. The United Nations definition is a severe and persistent deprivation of basic human needs. Relative poverty: Relative poverty measures the extent to which a household’s financial resources falls below an average income threshold for the economy for example equivalised household income below 60% of median incomes Poverty trap: The poverty trap affects people on low incomes. It creates a disincentive to look for work or work longer hours because of the effects of the tax and benefits system. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Market Failure, Poverty and Inequality, 2011-04-15T18:05:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/uk-minimum-wage-rises-by-25-in-october-2011 http://www.tutor2u.net/blog/index.php/economics/comments/uk-minimum-wage-rises-by-25-in-october-2011#When:08:59:00Z An update on the economics of pay floors in the labour market. The adult rate for the UK minimum wage will rise by 15p to £6.08 an hour from October. The 2.5% increase is broadly in line with pay settlements but well below consumer price inflation, which is expected to breach 5 per cent this year. So in real terms, the value of the minimum wage will drop. The rate for 18 to 20-year-olds will rise 6p, or 1.2 per cent, to £4.98, and for 16 to 17-year-olds by 4p, or 1.1 per cent, to £3.68. But the apprentices’ rate will go up by 10p, or 4 per cent, to £2.60. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, A2 Micro, AS Micro, Government Intervention, Minimum Prices, Labour Market, Poverty and Inequality, UK Economy, Unemployment, 2011-04-08T08:59:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/discrimination-and-distribution-of-income-news-resources http://www.tutor2u.net/blog/index.php/economics/comments/discrimination-and-distribution-of-income-news-resources#When:18:46:01Z If you are nearing the end of an A2 microeconomics syllabus and looking for current resources to help with issues of distribution of income and discrimination, the BBC came up with a couple of helpful items yesterday. AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, Labour Market, Macroeconomic Policies, Fiscal Policy, Supply-side policies, Poverty and Inequality, Teaching of Economics, 2011-03-29T18:46:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/recession-recovery-and-the-redistribution-of-income http://www.tutor2u.net/blog/index.php/economics/comments/recession-recovery-and-the-redistribution-of-income#When:05:53:00Z The BBC have been working with the IFS to study the effects of policies to deal with the recession and with the deficit, on the distribution of income. The results were published yesterday, just ahead of Wednesday’s Budget. Some results are hardly surprising - the richest decile have been hit the hardest - but the bottom decile have taken the next worst effects, and are much less able to deal with them than the richest. The study concludes that, across the board, real incomes in the UK fell by 1.6% a year between 2008 and 2011, compared with a rise per year of 1.6% during the previous 50 years. However the most important reasons are not so much loss of earnings from unemployment, as loss of investment income due to the historically low interest rates, and low increases in real wages. That loss of income from investments and savings hits pensioner households very hard. However in the fiscal year about to start, the median household income should rise by £120 as a result of tax and benefit changes, the IFS forecast. This “surprising” boost to incomes is a result of changes in personal allowances that have raised net income for many households. There is much more detail about the findings which is very worthwhile for those studying the distribution of income and the effectiveness of fiscal policy to achieve redistribution. I would suggest starting with Stephanie Flanders’ video report, followed by the BBC news article here and finally back to Stephanie Flanders for her blog about ‘The shrinking pound in your pocket’. It should then be possible to analyse the Chancellor’s announcements in the Budget speech on Wednesday, to consider what further effect his adjustments to fiscal policy will have on. If you want to extend this a bit further, look at this blog from Richard Young: Macroeconomic objectives: public finances in, income distribution out? AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, Poverty and Inequality, Standard of Living, Teaching of Economics, UK Economy, 2011-03-22T05:53:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/using-prezi-in-economics http://www.tutor2u.net/blog/index.php/economics/comments/using-prezi-in-economics#When:21:45:00Z Having been introduced to Prezi presentation software after reading about it in Andrew Macarthy’s excellent blog, I encouraged my year 11s to use it for a presentation task to do with poverty and was very impressed with the results. It’s a bit fiddly to begin with but fine once you get the hang of it and a great alternative to PowerPoint. With the permission of the authors (Elena, Gaby, Adriana and Teresa for the first and Juan, Ines, Guillermo and Sofia for the second) I’ve included their Prezi presentations below. Poverty and Inequality, Teaching of Economics, Digital Learning, 2011-03-14T21:45:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/video-resources-on-uk-relative-poverty http://www.tutor2u.net/blog/index.php/economics/comments/video-resources-on-uk-relative-poverty#When:14:38:00Z Here is a selection of video resources that I have used recently to support my teaching of poverty and inequality issues - special reference here to the UK (I have drawn on BBC news videos and special clips from oxfam and other agencies) Save the Children attacks child poverty figure (BBC Feb 2011 More children living in severe poverty in Britain (BBC news, Jan 2010) Parenting key to break child poverty (BBC news, December 2010) New benefit changes to be introduced for single parents (BBC news, Oct 2010) Living on £50 a week     AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, Poverty and Inequality, 2011-03-07T14:38:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/tony-atkinson-on-inequality-lse-lecture-notes http://www.tutor2u.net/blog/index.php/economics/comments/tony-atkinson-on-inequality-lse-lecture-notes#When:22:44:00Z My thanks to Leo Barnes and Tom Whitmey for producing these notes on “Income Distribution and Social Change after 50 years” - a talk given tonight at the LSE by Professor Sir Tony Atkinson - an extremely distinguished academic on subject of inequality and poverty. Poverty and Inequality, 2011-03-01T22:44:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/theory-thursdays-interesting-indices http://www.tutor2u.net/blog/index.php/economics/comments/theory-thursdays-interesting-indices#When:13:47:01Z Most students will now have met indices in some shape or form in their A-level course, probably in relation to the Consumer Price Index. This extension activity helps students to develop their understanding of the construction of indices in general. As a starting point, you may want to ask your students to contribute towards the latest Economist Big Mac Index, which looks at the price of a Big Mac in various cities around the world in order to work out whether exchange rates are over- or under- valued as well as the cost of living in various countries. The Economist has asked people around the world to go into their local McDonald’s and then post the price of a Big Mac onto their online forum - you can do this here. Inflation and Deflation, Introductory Economics, Poverty and Inequality, Teaching of Economics, Theory Thursday, 2011-02-17T13:47:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/inequality-on-the-rise http://www.tutor2u.net/blog/index.php/economics/comments/inequality-on-the-rise#When:18:17:00Z As my attention turns towards A2 macroeconomics now that the unit 3 exam is over, I was delighted with the helpfulness of The Economist in providing me with exactly what I needed for my lesson on income inequality. Read on to find out more… AS and A2 Specifications, EdExcel Economics Unit 4, A2 Macro, Emerging Economies, Development Economics, Poverty and Inequality, 2011-01-29T18:17:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/environmental-economics-five-fresh-links http://www.tutor2u.net/blog/index.php/economics/comments/environmental-economics-five-fresh-links#When:23:00:00Z Here are five links to stories and issues connected to environmental economics - we are embarking on a study of this for our A2 microeconomics AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, AS Micro, Emerging Economies, Development Economics, Cost Benefit Analysis, Environmental Economics, European Economy, Global Economy, Government Intervention, Market Failure, Externalities, Poverty and Inequality, Teaching of Economics, 2011-01-13T23:00:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/chinese-exports-mini-fact http://www.tutor2u.net/blog/index.php/economics/comments/chinese-exports-mini-fact#When:19:17:00Z The Christmas edition of The Week magazine has a selection of Statistics of the Year which have been published during 2010 and I like this one from Prospect Magazine - China now exports as much every six hours as it did in the whole of 1978. Could be used to illustrate the speed of growth of trade with the rest of the world? Emerging Economies, China Economy, Labour Market, International Trade, Market Failure, Externalities, Poverty and Inequality, Teaching of Economics, UK Economy, Quirky Trivia, 2011-01-04T19:17:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/using-google-docs-minimum-wages http://www.tutor2u.net/blog/index.php/economics/comments/using-google-docs-minimum-wages#When:20:20:00Z My AS micro group this week has been collaborating on an assignment on minimum wages using Google Docs. My stuents are becoming more adept at building arguments and editing and amending the contributions of others. We are limited in not having wireless access in the classroom - if we did students could enter, log in and work as a group in real time with the document being displayed on a screen and I could monitor their contributions and add in ideas and comments as we go. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, A2 Micro, AS Micro, Government Intervention, Minimum Prices, Labour Market, Poverty and Inequality, Standard of Living, Teaching of Economics, Digital Learning, Unemployment, 2010-11-27T20:20:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-costs-and-benefits-of-inequality http://www.tutor2u.net/blog/index.php/economics/comments/the-costs-and-benefits-of-inequality#When:13:50:00Z One of my teaching heroes - Robert Frank (Author of the Economic Naturalist) has this persuasive and no-nonsense article on the long term damage created by unprecedented levels of income inequality in the United States. “The economist’s cost-benefit approach — itself long an important arrow in the moral philosopher’s quiver — has much to say about the effects of rising inequality. We need not reach agreement on all philosophical principles of fairness to recognize that it has imposed considerable harm across the income scale without generating significant offsetting benefits.” His views on the risks from a winner takes it all society are included in the new film The Flaw now on release. And I heard him speak with great eloquence at the RSA the summer before last on the dangers of status races and conspicuous consumption. A hat tip to Shani Hartley for spotting his latest comment piece in the New York Times. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, A2 Micro, AS Micro, Cost Benefit Analysis, Poverty and Inequality, 2010-10-17T13:50:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/partial-progress-in-closing-the-gender-pay-gap http://www.tutor2u.net/blog/index.php/economics/comments/partial-progress-in-closing-the-gender-pay-gap#When:05:47:01Z A new report from the Equality and Human Rights Commission finds that only limited progress is being made in closing the gender pay gap in the British labour market. Some of the new figures are reported here on the BBC news site. The commission said that on average women earned 16% less than men, widening to 27% for women aged 40. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Labour Market, Market Failure, Poverty and Inequality, Teaching of Economics, UK Economy, 2010-10-11T05:47:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/lets-hear-it-for-the-girls http://www.tutor2u.net/blog/index.php/economics/comments/lets-hear-it-for-the-girls#When:16:40:00Z My better half and I recently popped along to the cinema to see ‘Made in Dagenham’. The film is set in the late 1960s and depicts the true story of the 200 female machinists and their fight for fair pay at the Ford plant in Dagenham, Essex in the late 1960s. The film is an archetypal feel-good piece of social history, and packed with interesting Economics. Teaching to the syllabus alas does not always afford us the luxury of discussing relatively recent Economic history – this is a real shame. An appreciation of these events I feel can really help to bring several topics alive. Encourage your students to go and see the film – it’s all there: 1/ Monopsony – In the late 1960s Ford employed 55,000 people in Dagenham – 54,800 of them were men 2/ Trade Unions and the Supply Side – wage negotiation and industrial action 3/ Legislation – The dispute was a catalyst for what became the 1970 Equal Pay Act: something that still provokes controversy; today – 40 years later – pay disparity still remains an issue (always extra fun to discuss this in an all boys’ school!) Cinemas are also of course excellent places in and of themselves as regards turning the restless mind to Economics issues. This particular establishment provides sofas for customers to lounge upon, and one is able to order items from the menu via a handy waiter/waitress service. This of course has several ramifications re the business model the firm operates. I marvelled at the application of cross price elasticity as I took in the outrageous prices on the menu! My thoughts turned to price discrimination as I pondered the ticket price! I glanced round approvingly at the civilised audience, gathered together in part via the power of the price mechanism! I can’t finish without mentioning the fact that the soundtrack during an advert for a well known brand of Corn Flakes was provided by one of my favourite bands … Primal Scream, a Scottish alternative rock group. I almost choked on my Sauvignon Blanc as I vacillated between thoughts of ‘sell out!’ and the use of multiple revenue streams to maximise the value of a well-known product. I have to tell you – the irrationality of the fan won the day …. Oh Bobby, how could you?   Business Economics, Management Issues, Price Discrimination, Demography, Economic History, Government Intervention, Regulation, Labour Market, Poverty and Inequality, Market Equilibrium and Price, Elasticity of Demand, Price Mechanism in Action, 2010-10-07T16:40:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/poor-countries-or-poor-people http://www.tutor2u.net/blog/index.php/economics/comments/poor-countries-or-poor-people#When:22:44:01Z A nice article in ‘The Economist’ this week that poses a really good development question. AS and A2 Specifications, OCR A2 Economics Unit F585, A2 Macro, Emerging Economies, Development Economics, Poverty and Inequality, 2010-10-04T22:44:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/update-on-millenium-development-goals http://www.tutor2u.net/blog/index.php/economics/comments/update-on-millenium-development-goals#When:08:49:00Z Continuing the theme of developing countries and globalisation, a UN Development Programme review of progress towards the Millennium Development Goals convenes in New York tomorrow. The UNDP website says that “The summit is an opportunity to re-energise the global commitment to achieve the eight time-bound goals and agree on a conrete action plan towards meeting the Goals by their target date of 2015. ”  It seems that this opportunity to re-energise is much needed; progress towards many of the goals is well behind schedule, and there is only five years left to achieve them, which coincides with government spending cuts around the globe. The Millenium Development Goals progress chart, produced in June, shows that for each of the 8 goals, over half of the indicators show either ” Progress insufficient to reach the target if prevailing trends persist” or “No progress or deterioration.” A2 Macro, Emerging Economies, Development Economics, Business Economics, Global Economy, Poverty and Inequality, Standard of Living, 2010-09-19T08:49:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/incentives-to-give-make-it-personal http://www.tutor2u.net/blog/index.php/economics/comments/incentives-to-give-make-it-personal#When:11:17:00Z The charity Water Aid has produced some innovative and striking adverts in recent months. I have embedded a selection into this blog. There is strong evidence that making charity appeals deeply personal to potential givers is more effective in raising donations than a broad brush approach about a particular crisis or illness. Dan Ariely has some interesting things to say about this aspect of altrustic behaviour in his recent book The Upside of Irrationality. If a giver can see how a donation can make a difference to a small group or individual they are more likely to make giving part of their default behaviour. So which of these (if any?) make a mark with you? Behavioural Economics, Emerging Economies, Development Economics, Poverty and Inequality, Teaching of Economics, 2010-09-12T11:17:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/coalition-budget-hits-poor http://www.tutor2u.net/blog/index.php/economics/comments/coalition-budget-hits-poor#When:12:55:00Z According to the Institute for Fiscal Studies, the coalition government’s first Budget of austerity has hit the poorest families hardest. It has said the measures announced in the Budget in June were regressive. The IFS said the poorest 10% of families would lose over 5% of their income as a result of the budget compared with a loss of less than 1% for non-pensioner households without children in the richest 10% of households. It added that the budget contrasted with the “progressive” plans for 2010-14 inherited from Labour, under which the richest 10% of households bore the brunt of the cuts. The analysis suggests that cuts to areas such as housing benefit and disability allowance would hit the poorest to the tune of £422 between the Budget and April 2014. The report also questioned the government’s decision to use the Consumer Prices Index (CPI) instead of the Retail Prices Index (RPI) when calculating certain benefits. More from the BBC here or the full IFS report can be found here. A summer hat tip to Stephen Lightfoot from Blue Coat School Oldham for flagging up that the IFS data on UK income distribution can be downloaded from their site. Stephen writes: “The IFS website gives access to the report but perhaps more interestingly has a link to a ZIP file which provides income distribution data for the UK since 1961. An edited version would almost certainly provide some good discussion opportunities as well as ICT based analysis.” The data can be found here AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Macroeconomic Policies, Fiscal Policy, Poverty and Inequality, Teaching of Economics, 2010-08-25T12:55:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/inequality-and-the-risk-of-financial-crisis http://www.tutor2u.net/blog/index.php/economics/comments/inequality-and-the-risk-of-financial-crisis#When:08:38:00Z Are there causal links between the scale of income and wealth inequality and the risks of financial crisis and distress? This article from the New York Times reports on research from David A Moss at the Harvard Business School who continues to mine cross country data on inequalities to see if there are close correlations with banking crises in particular countries. Might it be the case that persistent relative poverty among lower income groups was a factor driving the expansion of sub-prime lending and excessive borrowing on very expensive credit cards? Or was the sub-prime debacle largely the result of inappropriate financial deregulation and policy interest rates being held close to zero for too long rather than a trend rise in inequality? What of the incentives of people at the top of the income scale? Has the rising economic power and influence of the super rich played some role in creating the conditions for financial and macroeconomic instability. Correlation does not necessarily imply causation as the article makes clear in an interview with Glenn Hubbard from the Columbia Business School. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, Cycles and Shocks, Global Economy, Credit Crunch, OECD Economies, US Economy, Poverty and Inequality, Teaching of Economics, 2010-08-25T08:38:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/what-the-poverty-figures-show http://www.tutor2u.net/blog/index.php/economics/comments/what-the-poverty-figures-show#When:08:49:00Z There is an interesting piece here in the Guardian by Julia Unwin from the Joseph Rowntree Foundation about the latest UK poverty and inequality figures. Crucially she flags up reforms needed in the welfare benefits system skills training, availability of child care and low pay / living wages - four areas where reforms can make a big difference, albeit with a potentially hefty price tag. AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, AS Micro, Poverty and Inequality, Standard of Living, 2010-05-25T08:49:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/grameen-america http://www.tutor2u.net/blog/index.php/economics/comments/grameen-america#When:14:41:01Z An interesting example of microfinance applied to New York, rather than rural villages in developing countries. This CNN clip discusses Grameen America, the microcredit scheme for individuals with poor credit ratings and a lack of access to formal credit markets. A2 Macro, Emerging Economies, Development Economics, Market Failure, Information Failure, Poverty and Inequality, 2010-04-29T14:41:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/detail-of-the-deepest-spending-cuts-since-the-1970s http://www.tutor2u.net/blog/index.php/economics/comments/detail-of-the-deepest-spending-cuts-since-the-1970s#When:05:51:00Z Following on from Geoff’s blog below about recent IFS reports, their latest research released yesterday looks at the scant detail that the three main political parties have given of their plans for spending cuts and tax rises, if elected. This could be introduced with this video of writer Will Self, who reckons the parties are in denial about the real challenges which face them after the election, and the IFS report adds the numbers to this suggestion. Macroeconomic Policies, Fiscal Policy, Supply-side policies, Poverty and Inequality, Teaching of Economics, UK Economy, 2010-04-28T05:51:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/links-to-recent-ifs-research http://www.tutor2u.net/blog/index.php/economics/comments/links-to-recent-ifs-research#When:17:36:00Z The Institute for Fiscal Studies occupies a lofty place in any coverage of the fiscal crisis facing the British economy. Their independent research is frequently quoted and the fiscal plans of the three main parties are scrutinised in the context of the dispassionate analysis that the IFS brings to bear. Some seriously good economists have cut their teeth at the IFS before moving onto other things. Here is the link to the recent research publications from the IFS. Among the various election and budget reports there are some good documents on what has happened to productivity during the recession and an analysis of what has happened to poverty during the 13 years of the Labour government. Macroeconomic Policies, Fiscal Policy, Supply-side policies, Poverty and Inequality, Teaching of Economics, UK Economy, 2010-04-27T17:36:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/world-bank-throws-open-its-development-data http://www.tutor2u.net/blog/index.php/economics/comments/world-bank-throws-open-its-development-data#When:08:34:00Z An important moment and a great boon for teachers and students of development economics. The World Bank has made the 2010 Human Development Data available to all - here World Bank President Robert B. Zoellick speaks about the Bank’s new open data initiative. And here is the link to the development data and all of the macro data contained in the global economic monitor. A remarkable and generous gesture from the World Bank. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, OCR A2 Economics Unit F585, A2 Macro, AS Macro, Emerging Economies, Development Economics, Economic Growth, Poverty and Inequality, Standard of Living, Teaching of Economics, 2010-04-21T08:34:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/health-economics http://www.tutor2u.net/blog/index.php/economics/comments/health-economics#When:14:29:01Z A good article in the Economist on the market (failure) in healthcare vis-a-vis organ donation. AS and A2 Specifications, EdExcel Economics Unit 1, AS Micro, Health Economics, Market Failure, Poverty and Inequality, 2010-04-19T14:29:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a-widening-north-south-divide http://www.tutor2u.net/blog/index.php/economics/comments/a-widening-north-south-divide#When:22:00:01Z Fresh data on regional household income confirms a widening gap between northern and southern regions. In 2008, regional household disposable income per head was above the UK average in three regions: London (£19,038); the South East (£16,792) and East of England (£15,509). The lowest GDHI per head was in the North East (£12,543). More comment here from the Guardian. The ONS calculation adds up wages, benefits, pensions and other forms of income such as share dividends, and subtracts taxes, pension contributions and interest payments on mortgages or credit cards. A2 Macro, AS Macro, Poverty and Inequality, Standard of Living, UK Economy, Regional Economics, 2010-04-02T22:00:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/res-essay-competition-inequality-title http://www.tutor2u.net/blog/index.php/economics/comments/res-essay-competition-inequality-title#When:16:16:00Z This essay has an intriguing title “The pursuit of lower income inequality is irrational and counter-productive. Discuss.” To what extent and how far ought a government move in a bid to reshape the final distribution of income in a society? This is an essay where value judgements are unavoidable but also one which offers students a chance to research and discuss some of the complex economic and social effects of redistribution policies. Poverty and Inequality, Teaching of Economics, 2010-04-01T16:16:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/millenium-development-goals http://www.tutor2u.net/blog/index.php/economics/comments/millenium-development-goals#When:19:22:00Z A very good resource for development economics, discussing the UN’s Millenium Goals. It also has some cool interactive maps, resizing the world map according to various metrics such as population living on less than $1.25 a day; or amount of international aid received. Another useful link is at the BBC here, with another cool interactive graphic which provides a neat insight into why the measure of relative poverty in the UK ( A2 Macro, Emerging Economies, Economic Growth, Poverty and Inequality, 2010-03-17T19:22:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-of-happienss-v2010 http://www.tutor2u.net/blog/index.php/economics/comments/economics-of-happienss-v2010#When:21:17:00Z The economics of happiness does the rounds every year or so and here is v.2010. The latest edition of Economic Journal revisits the “economics of happiness” literature this week. A2 Macro, A2 Micro, AS Macro, AS Micro, Behavioural Economics, Poverty and Inequality, 2010-03-14T21:17:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/carlos-slim-monopoly-and-a-licence-to-print-money http://www.tutor2u.net/blog/index.php/economics/comments/carlos-slim-monopoly-and-a-licence-to-print-money#When:18:07:00Z The latest Forbes rankings of the world’s wealthiest people is the cue for a slew of articles and short features. Rory Cellan-Jones has this BBC news video piece on the wealth attributed to Carlos Slim the Mexican telecoms monopolist who controls 90 per cent of landlines and 80 per cent of mobile connections in that country. A super piece to show to illuminate the chasm in income and wealth in Mexico. A2 Micro, AS Micro, Emerging Economies, Business Economics, Monopoly, Economic Growth, Poverty and Inequality, Teaching of Economics, 2010-03-12T18:07:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/utopia-and-the-21-hour-working-week http://www.tutor2u.net/blog/index.php/economics/comments/utopia-and-the-21-hour-working-week#When:10:19:00Z The authors of the New Economics Foundation’s report into the length of the working week have suggested that working hours should be limited to a maximum of 21 hours per week. But the unemployment data from the ONS last month shows that such a change is being imposed on thousands of workers whether they like it or not; part-time employment rose by 99,000 in the three months to November 2009, replacing most of the 113,000 full-time jobs lost over the same period. A2 Macro, Economic Growth, Labour Market, Macroeconomic Policies, Supply-side policies, Poverty and Inequality, Unemployment, 2010-02-13T10:19:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/climate-crunch-making-the-economics-fit http://www.tutor2u.net/blog/index.php/economics/comments/climate-crunch-making-the-economics-fit#When:23:54:00Z The erstwhile environmental campaigner, journalist and broadcaster Jonathan Porritt gave an impassioned talk on the politics and economics climate change at the LSE tonight. We are in a period of extraordinary turmoil in the global politics of climate change. Here in the UK, support for the idea of man-made climate change is actually lower at the end of 2009 despite one of the most expensive government information TV and cinema campaigns ever launched. But by and large, people seem to be turned off by the warnings of scary apocalyptic misery. A2 Micro, AS Micro, Emerging Economies, Cost Benefit Analysis, Environmental Economics, Global Economy, Government Intervention, Market Failure, Poverty and Inequality, Standard of Living, Teaching of Economics, UK Economy, 2010-02-04T23:54:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/more-on-poverty-strategies http://www.tutor2u.net/blog/index.php/economics/comments/more-on-poverty-strategies#When:08:37:00Z Benefit take up is low in the UK and about £16bn in income-related benefits and tax credits goes unclaimed in the UK in a year. Improving take up can have a big effect on the disposable incomes of lower income families. This BBC article is relevant here. Paul Mason provides this excellent four minute report on poverty policies and focuses on the idea of bottom-up approaches including encouraging social entrepreneurship as a way of stumulating employment opportunities within local communities. The Persistence of Poverty The UK has a worse infant mortality rate than Greece, despite having almost double the income per person - Guardian Blog A2 Micro, AS Micro, Government Intervention, Labour Market, Poverty and Inequality, Standard of Living, Teaching of Economics, UK Economy, 2010-02-04T08:37:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/child-poverty-and-pensioner-poverty http://www.tutor2u.net/blog/index.php/economics/comments/child-poverty-and-pensioner-poverty#When:23:46:00Z These short video pieces proved effective today when raising issues to do with the causes of persistent relative poverty for vulnerable groups in the economy. First Mark Easton’s piece on Severe child poverty ‘going up’ (26 Jan 2010). Then this short piece on pensioner poverty:  And an audio interview with Professor John Hills on the Today programme. A2 Micro, AS Micro, Poverty and Inequality, Standard of Living, Teaching of Economics, 2010-02-02T23:46:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/assorted-links-27-jan-focus-on-poverty-and-inequality http://www.tutor2u.net/blog/index.php/economics/comments/assorted-links-27-jan-focus-on-poverty-and-inequality#When:16:50:01Z There has been a fresh series of reports on the scale of relative poverty in the UK. Here are some relevant links: 1/ BBC news video: Divide between rich and poor ‘wider than 1970s’ 2/ Guardian: 2 million pensioners live in poverty 3/ Guardian: Unequal Britain: richest 10% are now 100 times better off than the poorest. 1980s income gap still not plugged, say analysts 4/ Independent: On the right and right-on: a portrait of Britain today 5/ BBC news: Save the Children says severe child poverty ‘going up’ A2 Micro, AS Micro, Government Intervention, Poverty and Inequality, Standard of Living, Teaching of Economics, UK Economy, 2010-01-27T16:50:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/low-pay-discrimination-and-monopsony-power-in-the-labour-market http://www.tutor2u.net/blog/index.php/economics/comments/low-pay-discrimination-and-monopsony-power-in-the-labour-market#When:06:54:00Z As part of our A2 micro course we are looking at aspects of labour market failure at the moment and today we cover discrimination in its different guises and the issue of possible monopsony power and wage exploitation. Here are some links to BBC news resources on this topic including some useful video clips A2 Micro, Labour Market, Market Failure, Poverty and Inequality, Standard of Living, Teaching of Economics, UK Economy, 2010-01-26T06:54:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/chinese-growth-in-words-and-pictures http://www.tutor2u.net/blog/index.php/economics/comments/chinese-growth-in-words-and-pictures#When:06:42:00Z Statistics about the speed of China’s development never cease to be amazing, no matter how many times you read them. Here is another one; in the dark days of 2009 the Chinese economy grew by yet another 8.7% (10.7% in the final quarter of the year) so that it is now set to overtake Japan, which probably shrank by 6% over the same period, to be the world’s second largest economy. And yet, according to Ma Jiantang, head of the National Bureau of Statistics, there are still 150 million people in China living on $1 a day and so poor according to the UN’s standard rating. This gives a remarkable contrast as the world’s second or third largest economy is also a developing nation with enormous conflicts and trade-offs in macroeconomic policy to resolve. Mr Ma also referred to the concerns about inflation in China - he said price rises were “mild and under control”, but over recent days the government has tried to limit the amount of loans made by the country’s banks in order to avoid a ‘domestic bubble’ of growth. This is the focus of the Times’ report, which highlights expectations that there may be a rise in interest rates in China in the next two months. A2 Macro, AS Macro, Emerging Economies, China Economy, Economic Growth, International Trade, Macroeconomic Policies, Monetary Policy, OECD Economies, Japan Economy, Poverty and Inequality, 2010-01-21T06:42:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-value-of-work http://www.tutor2u.net/blog/index.php/economics/comments/the-value-of-work#When:12:38:00Z Here’s an interesting debate that’s cropped up from a report published this week by the New Economics Foundation.  Those of you who have looked at the value of labour will be familiar with the concept of marginal revenue product.  That’s to say that it’s worth me paying you £100,000 a year if you bring in benefits to my firm that are equal to or greater than that value.  The NEF twist is that they subtract from this an estimated amount equivalent of how much damage you do to society.  It’s a kind of bizarre (and highly debateable!) version of labour market economics meets negative externalities. Their conclusion: cleaners are worth more to society than bankers. Labour Market, Market Failure, Poverty and Inequality, 2009-12-15T12:38:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/green-gold-in-tanzania http://www.tutor2u.net/blog/index.php/economics/comments/green-gold-in-tanzania#When:07:05:00Z Lots of examples of opportunity cost and market failure in this video report from Africa about jatropha, a crop that can be used to produce biofuels. It has a number of advantages; it can’t be used for food, so avoids the dilemma of competing demand or supply suffered by crops like maize and soya, it grows naturally in tough conditions and is fairly drought resisitant so can be cultivated in areas which won’t support other crops, and is poisonous to animals so crops are unlikely to be spoiled by animals looking for food. On the other hand it takes some years to reach productive maturity, so requires investment, and time and money put into producing it could be used to grow food crops for people and livestock in exceptionally poor areas of Africa. There are a number of small scale european businesses trying to invest in this part of the world by setting up plantations on a commercial scale, but they face a long timescale to receive any payback on that investment, once they have negotiated with government and local tribes for access to the land and local labour supply and developed the infrastructure to support transport power and irrigation. How should the government intervene, in order to ensure short term provision of food and facilities for local people living on a dollar a day, and also long term potential for inward investment in infrastructure and jobs? What are the advantages and disadvantages of allowing this to be developed by outside investors rather than by local co-operatives? A2 Macro, AS Micro, Emerging Economies, Global Economy, Government Intervention, Market Failure, Poverty and Inequality, 2009-12-14T07:05:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/new-wealth-data http://www.tutor2u.net/blog/index.php/economics/comments/new-wealth-data#When:08:31:00Z The Office of National Statistics have released updated figures on the distribution of national wealth. The richest fifth have nearly two thirds of the wealth. More startling is that the poorer half of us speak for just 9p in every £1 of privately held wealth. Private household net wealth in Great Britain totalled £9 trillion in 2006/08 and nearly 80% of this is accumulated in property and private pension entitlements.  Median household net wealth was £204,500 in 2006/08. The least wealthy half of households accounted for only 9 per cent of wealth, while the wealthiest 20 per cent of households had 62 per cent of total wealth. The least wealthy 10 per cent of households had negative total net wealth Median net wealth – including pensions, houses and cars, but excluding mortgages and other debt – of a household in the South East is £287,900. In Scotland, it is £150,600. The Lorenz curve for wealth is more skewed than it is for income and it is an interesting exercise for students to explain why and discuss the consequences for over-lapping generations. A2 Macro, A2 Micro, AS Macro, Poverty and Inequality, Teaching of Economics, UK Economy, 2009-12-11T08:31:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/really-clear-income-inequality-chart http://www.tutor2u.net/blog/index.php/economics/comments/really-clear-income-inequality-chart#When:23:36:00Z One of the clearest charts explaining the gini coefficient that I have seen. And here is another one on foreign direct investment. A2 Macro, AS Macro, Global Economy, Poverty and Inequality, Teaching of Economics, 2009-12-02T23:36:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/market-failure-in-city-gender-inequality http://www.tutor2u.net/blog/index.php/economics/comments/market-failure-in-city-gender-inequality#When:20:42:01Z Study of the labour market includes market failures and gender inequality. It seems to me that, ever since the start of the financial crisis that led to the recession, there has been a series of reports suggesting that if there were more women in positions of power in the city institutions that lost control of their lending, this would never have happened. This is now confirmed by a committee of MP’s (which includes only one woman) which is currently studying the role of women in the City and has been told by a (male) professor from the London School of Economics that a more cautious approach, rather than an “alpha male” one, would be beneficial. Professor Charles Goodhart explained that the more cautious and long-term outlook of women could prove to be a more positive trait than the more aggressive risk-taking stance of men. However, another LSE professor told the committee of MPs that there is a need for a change of culture in the City before this can happen. It seems that women are well-represented on the boards of the FTSE top 250 companies, but very under-represented on the boards of the FTSE 100. In Norway there is a quota system; 40% of board members must be female. Clare Dobie, of the City Women’s Network told the committee that recruiters could do much to help the problem which her organisation sees as an issue of too little demand rather than a shortage of supply of women who are good enough for the job. A report last month from the Equality and Human Rights Commission found that women working in the city are paid on average 39% less than men doing the same job. Women start on a lower salary and never make up the difference. They also earn bonuses which are up to five times smaller than those earned by their male colleagues - on average, women get bonuses of £2,875 compared with £14,554 for men. However the gender pay gap should be addressed there does remain a practical difficulty though: John Cridland, deputy director general of business group the CBI, said “As in many other areas of business, women applying for the top jobs need more flexibility with hours and childcare responsibilities” .  How long will it remain the case that it is the women who need this flexibility, and not the men? AS Micro, Labour Market, Market Failure, Poverty and Inequality, 2009-10-14T20:42:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/escaping-from-the-poverty-trap http://www.tutor2u.net/blog/index.php/economics/comments/escaping-from-the-poverty-trap#When:20:39:00Z There is a timely article on the existence of the poverty trap here in the Financial Times. The article draws on some of the recent research by the Centre for Social Justice which has looked at the disincentives facing people who want to earn extra income either by leaving the unemployment register or by taking a second job or working some extra hours. There are hundreds of thousands of people whose ‘effective marginal tax rate’ is well in excess of sixty per cent. As this article in the Times makes clear “Marginal tax rates actually refer to the extra tax you pay in proportion to every extra pound you earn as your income rises.: And for others, the net gains from earning higher gross incomes are even smaller.  The poverty trap comes about because for every £10 of higher incomes many lower-income families 1: A loss of income from tax and national insurance 2: The withdrawal of means-tested social security (welfare) benefits Add in the financial costs of child care, traveling to and from work and the deterrent to finding a job or accepting some extra hours can be tough to overcome. Disincentives matter hugely in the labour market and benefit reforms are likely to figure prominently in the manifesto of the Conservative Party at the next general election. It seems at the moment that they are taking a lead in developing a more radical approach to labour market reform. The Centre for Social Justice appears to be influential in reshaping their strategies to get people off benefits and into work. A2 Macro, AS Macro, Government Intervention, Government Failure, Labour Market, Poverty and Inequality, Standard of Living, Unemployment, 2009-10-11T20:39:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/income-inequality-in-the-usa http://www.tutor2u.net/blog/index.php/economics/comments/income-inequality-in-the-usa#When:17:59:00Z The Economist carries a short feature on the scale of income inequality in the USA and finds that a quarter of America’s total income is earned by the top 1% of the population. “The concentration of income earned by this top percentile now stands at its highest since 1928. Two-thirds of the country’s total gains in the five years to 2007 accrued to the top 1%, whereas the bottom 90th percentile saw only 12% of the extra income.” We have been looking at income inequality as part of our study on measuring the standard of living. Wikipedia carries up to date information on measures such as the Gini coefficient for countries where the relevant data is available. A2 Macro, AS Macro, Poverty and Inequality, Standard of Living, US Economy, 2009-10-09T17:59:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-boy-who-harnessed-the-wind1 http://www.tutor2u.net/blog/index.php/economics/comments/the-boy-who-harnessed-the-wind1#When:07:35:00Z This fantastic true story of boy’s dream to improve the standard of living in his village in Malawi is both inspiring and full of good economic examples (and therefore a winning combination!). William Kamkwamba’s family had to pull him out of school in Malawi as they could no longer afford the £50 annual fee; however, he continued to use his local library to study science and set out on a project to use items of junk and waste to build a windmill in order to bring electricity and running water to his village. There are some lovely examples here relating to development in terms of grassroots approaches, some of the problems faced by those living in developing countries, the positive externalities associated with education, alternative measures to tackling climate change as well as an inspirational entrepreneurial story. I for one will be buying the book telling the story of this young man’s vision. Behavioural Economics, Game Theory, Economic Growth, Market Failure, Externalities, Public Goods, Poverty and Inequality, Development Economics, 2009-10-01T07:35:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/one-family-in-six-in-the-uk-has-no-one-in-work http://www.tutor2u.net/blog/index.php/economics/comments/one-family-in-six-in-the-uk-has-no-one-in-work#When:20:42:00Z There are now over 3 million households in the UK where no one of working age is in any form of work - the relentless rise of the ‘workless household’ is highlighted by new figures from the Office for National Statistics who have found that the number of working-age people in workless households jumped by 500,000 to 4.8 million in the year to June. 17% of households with people of working age have no one participating in the formal labour market. 2 million children belong to them and the risks of persistent and deep poverty are greatest for these groups. Little wonder that benefit dependency is rife for such families - the paradox is that those on the lowest incomes or whose main source of income are transfer payments, often face the highest effective marginal tax rates. Crucially the depth of non-employment is highest among lone-parent families - the workless household rate was highest for lone parent households, at 40.4 per cent, More here from the Guardian Here is a regional snapshot of the problem - with the North East, Inner London and Northern Ireland suffering from the highest rates of economic inactivity among families with one or more people of working age A2 Macro, AS Macro, Labour Market, Poverty and Inequality, Standard of Living, UK Economy, Regional Economics, Recession Watch, Unemployment, 2009-08-27T20:42:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/what-is-poverty http://www.tutor2u.net/blog/index.php/economics/comments/what-is-poverty#When:15:18:00Z Michael Blastland has an excellent piece on the difference between absolute and relative poverty in this article on the BBC news website Very clear on medians, means and where to draw the line when measuring official levels of relative poverty. A2 Micro, AS Micro, Economic Growth, Market Failure, Poverty and Inequality, UK Economy, 2009-07-31T15:18:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-snapshot-the-impact-of-tax-and-benefits-on-inequality-in-the-uk http://www.tutor2u.net/blog/index.php/economics/comments/economics-snapshot-the-impact-of-tax-and-benefits-on-inequality-in-the-uk#When:11:10:01Z Progressive income tax and cash welfare benefits help to reduce the gap between the richest and poorest households in the UK. In 2007/08, original income (before taxes and benefits) of the top fifth of households in the UK was £72,600. This is approximately 16 times as great as the figure of £4,700 for the bottom fifth. After taking account of all taxes and benefits, the top fifth had an average final income of £52,400 per year compared with £14,300 for the bottom fifth of households, a ratio of four to one. The latest figures for the impact of tax and benefits on the UK income distribution reveal the importance of cash benefits such as Income Support, Pension Credit, Child Benefit, Incapacity Benefit and Retirement Pension as a means of redistribution.  play a major role in reducing income inequality. Of the total amount of cash benefits received, the bottom two quintile groups together receive 57 per cent. Cash benefits represent around 58 per cent of gross income for the bottom quintile group and 36 per cent for the second quintile group, falling to 2 per cent for the top fifth of households. Direct taxation, with the exception of Council tax and Northern Ireland rates, is progressive; that is households at the lower end of the income distribution pay smaller proportion of their income in direct tax compared with higher income households. As a proportion of their gross incomes, households in the bottom quintile group pay an average of 11 per cent in direct taxes compared with 25 per cent for those in the top quintile group. In contrast indirect taxes are found to have a regressive effect on the final distribution of income. Overall the latest figures from the ONS find that income inequality in the UK in 2007-08 was little changed from the year before. This BBC news article provides more background. A2 Micro, AS Micro, Government Intervention, Indirect Taxes, Poverty and Inequality, 2009-07-30T11:10:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/using-the-big-question http://www.tutor2u.net/blog/index.php/economics/comments/using-the-big-question#When:10:31:00Z The Big Question feature in the Independent is a reassuringly regular source of useful and interesting background articles. There is often an economic / environmental /social / business perspective to their choice of topics in the news. And the Indy handily provides some vivid graphics that can serve well as student handouts or a prompt for a data response question. Here is a brief selection of recent features Why is inequality rising in the UK? (July 2009) Can the G8 meet its climate change targets? (July 2009) What has gone wrong between the Chancellor and the Governor? (June 2009) Will there be cuts in public spending whichever party is in power? (June 2009) Why are games consoles the focus of the battle between computer giants? (June 2009)   Business Economics, Monopoly, Cost Benefit Analysis, Economic Growth, Economics of Technology, Environmental Economics, Government Intervention, Poverty and Inequality, Teaching of Economics, UK Economy, Fiscal Policy, Keynesian Economics, 2009-07-28T10:31:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/world-food-price-inflation http://www.tutor2u.net/blog/index.php/economics/comments/world-food-price-inflation#When:07:29:00Z Thursday’s Daily Chart at economist.com shows a wide variation in the rate of food price inflation around the world, from increases of 15% in Russia to a fall of 1.3% in China. Bearing in mind the weight that is attached to food purchases in countries with a lower disposable income, where a higher proportion of income is spent on food than in the developed economies, this is worth looking at to assess how the local economies of the countries will be affected. Also worth looking at the BBC’s World Service Food Price Index from June 1st, which tells a similar story and looks at a basket of five staple foods in seven major cities around the globe. A2 Macro, Emerging Economies, Development Economics, Global Economy, Poverty and Inequality, Standard of Living, 2009-06-20T07:29:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/life-in-the-middle-income-distribution-in-the-uk http://www.tutor2u.net/blog/index.php/economics/comments/life-in-the-middle-income-distribution-in-the-uk#When:08:41:01Z The TUC has published a report ‘Life in the Middle - The Untold Story of Britain’s Average Earners’ surveying ‘Middle Britain’ in particular, and income distribution across the population as a whole. They define Middle Britain as the fifth of the population (quintile) which earns within 10% of the median income of about £20,000 per year for households in the UK in 2006/7, the last year when full figures are available. The results make very interesting reading, and give some good up-to-date figures on income distribution for use in A2 microeconomics papers. A2 Micro, Labour Market, Market Failure, Factor Immobility, Poverty and Inequality, Standard of Living, UK Economy, 2009-05-28T08:41:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/labour-market-failure-exploitation-of-migrant-workers http://www.tutor2u.net/blog/index.php/economics/comments/labour-market-failure-exploitation-of-migrant-workers#When:15:46:00Z Martin Shankleman of the BBC reports on what looks a like a blatant example of exploitation of vulnerable migrant workers who seek employment in the (often unlicensed) UK food processing industry. Gangmasters have monopsonistic power in their own labour markets and, as this report shows, Saphire Trading based in Southampton appears to have shown a disgusting lack of care for many of the people they have taken on. A severe case of labour market failure and one that requires effective regulation - in this case the Gangmasters Licensing Authority. A2 Micro, Government Intervention, Regulation, Labour Market, Market Failure, Poverty and Inequality, 2009-05-27T15:46:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/beware-women-at-work http://www.tutor2u.net/blog/index.php/economics/comments/beware-women-at-work#When:07:14:00Z The BBC is running a two-part series called ‘The Trouble with Working Women’ to examine why sexual equality is a distant prospect, which might be of interest in considering this aspect of labour economics and the distribution of income. The first part is broadcast tonight on BBC2 at 9pm, and the second part at the same time tomorrow. Links here are to two associated items on their website, the first to the story of one couple who decided that the father of their new baby should be the one to stay at home and look after her, the second to an article about why women need to think like men if they want more cash - including a quiz to determine how likely you are to earn more or less! Who’s left holding the baby? Why XX must think like XY to earn more K A2 Micro, Labour Market, Poverty and Inequality, 2009-05-18T07:14:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/uk-minimum-wage-to-rise http://www.tutor2u.net/blog/index.php/economics/comments/uk-minimum-wage-to-rise#When:06:25:00Z The Low Pay Commission has recommended a small increase in the national minimum wage covering hundreds of thousands of Britain’s lowest paid workers and yesterday the government announced that Britain’s minimum wage will rise by 7p, or 1.2%, to £5.80 an hour. The new adult rate for workers aged 22 and over will come into effect in October. The rate for 18- to 21-year-olds will rise from £4.77 to £4.83, while for those 16 and 17, the statutory rate will go up to £3.57 an hour from £3.53. The increase means adults working a 40-hour week will receive at least £232 before taxes and other deductions. Retail and hospitality, account for 44 per cent of all minimum wage jobs. The next largest industries, social care and cleaning, each account for 6 to 7 per cent. In the light of current economic circumstances should the NMW have been frozen? RPI inflation has fallen into negative territory but CPI inflation remains well above the 2% target - so any NMW freeze would have meant a real wage cut for people at the bottom of the pay ladder. Indeed the rate of inflation experienced by such people is highly unlikely to be either of the two officially published inflation figures. And decisions on the NMW have important implications for equity and efficiency in the labour market. The TUC argues that low paid workers have done nothing to cause the credit crunch and the subsequent economic crisis - so why should they pay the price with a wage cut? Supporters of a statutory pay floor would also argue that wage cuts could have a damaging effect on worker morale and productivity. The minimum wage is not a living wage and thousands of people dependent on it have seen their hours cut as employers move to shorter-time working. In a related story affecting restaurants and many other consumer service industries, employers will be banned from using tips to bring workers’ pay up to the minimum wage from October.   A2 Micro, AS Micro, Business Economics, GCSE Economics, Government Intervention, Minimum Prices, Labour Market, Poverty and Inequality, Unemployment, 2009-05-13T06:25:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/policy-failure-rising-inequality http://www.tutor2u.net/blog/index.php/economics/comments/policy-failure-rising-inequality#When:09:22:00Z Labour’s long-term aim of abolishing child poverty and scaling back the depths of relative poverty among Britain’s poorest households looks to be falling apart judging from the latest official statistics on the number of families living below average income. The data finds that the number of people living in poverty has climbed to 11 million by March 2008, a rise of 300,000 since 2006. And nearly a quarter of a million working adults fell below the poverty line last year - the line being families living on less than sixty per cent of median income adjusted for household size. According to the Institute of Fiscal Studies, inequality (or relative poverty - for it amounts to the same thing) has risen to its highest level since 1961. The Gini Coefficient, a measure of income inequality, is now at its highest level since the IFS began compiling figures in 1961 And this before the true effects of the recession on poverty start to show through in published figures. The core facts are these: In 2008-08 median income was £393 per week and mean income was £487 per week. (Students should be able to explain the difference!) The Gini coefficient rose to 0.36 in 2007-08 - the highest recorded figure since 1961 In 2007/08, there were 2.9 million children living in UK households with below 60 per cent of contemporary median net disposable household income - one child in five lives in a family operating below the poverty line. Britain has one of the highest incidences of child poverty in the European Union In 2007/08, there were 5.6 million working-age adults living in UK households with below 60 per cent of contemporary median net disposable household income Before Housing Costs, and 7.5 million After Housing Costs. In 2007/08, there were 2.5 million pensioners living in UK households with below 60 per cent of contemporary median net disposable household income Before Housing Costs, and 2.0 million After Housing Costs. In 2007/08, there were 11.0 million people living in households with below 60 per cent of contemporary median net disposable household income Before Housing Costs (BHC), and 13.5 million After Housing Costs (AHC).  More here Guardian: Child poverty reduction halted by recession Telegraph: Gap between rich and poor grows to record levels, official figures show A2 Micro, AS Micro, Government Intervention, Market Failure, Poverty and Inequality, UK Economy, 2009-05-10T09:22:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/positive-price-discrimination-at-south-africa-2010 http://www.tutor2u.net/blog/index.php/economics/comments/positive-price-discrimination-at-south-africa-2010#When:22:54:00Z As you can see from several entries on the IB Economics Blog today, Africa is suffering a significant reduction in growth in the global slowdown. The IMF summit taking place in Tanzania this week is looking for ways to combat this. However, demand for some scarce goods remains very inelastic, and it seems likely that even in the midst of the gloom tickets for the football World Cup in South Africa in June-July 2010 will be over-subscribed. Ticket prices for sports events offer opportunities for price discrimination and maximum price setting, and the ticketing process for the World Cup in South Africa takes advantage of this on behalf of local people rather than the supplier, and seeks to ensure that some consumer surplus is available to them. This could be an important factor for a country with almost 22% unemployment, two quarters of negative GDP growth, GPD per capita of $10,400 in 2008 but a GINI index of 65 (2005) indicating significant inequality in the distribution of income (compared with 38 in the EU). A2 Micro, Business Economics, Price Discrimination, Poverty and Inequality, Development Economics, 2009-03-10T22:54:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/programme-on-unemployment http://www.tutor2u.net/blog/index.php/economics/comments/programme-on-unemployment#When:17:02:00Z A quick heads up on Dispatches on Monday 16th February, 8pm, Channel 4: Four months after leaving his post as Minister of Trade, Lord Digby Jones examines how the government is tackling the unemployment crisis. He analyses each of Gordon Brown's pledges to help people back into work and training, to see whether the system for handling the newly unemployed is working. A2 Macro, AS Macro, Poverty and Inequality, Teaching of Economics, Unemployment, Supply-side policies, 2009-02-13T17:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/equality-of-unemployment http://www.tutor2u.net/blog/index.php/economics/comments/equality-of-unemployment#When:15:01:00Z Getting more women into the labour force and into employment has been a deliberate aim of government intervention over the last 30 years or so. Benefits, training, flexible working and childcare schemes have all focused clearly on encouraging women to work rather than to choose not to do so. Your study of employment figures in the UK will show that the increases in employment over the last 10 years or so have favoured women; more of them are in work, women now earn more than men in a fifth of couples, and more households depend upon a woman’s wage. A quarter of households with children are headed by lone parents, 90 per cent of whom are women. A2 Macro, Government Intervention, Labour Market, Poverty and Inequality, Unemployment, 2009-01-21T15:01:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/trends-in-uk-income-inequality http://www.tutor2u.net/blog/index.php/economics/comments/trends-in-uk-income-inequality#When:23:05:33Z Source: The distribution of household income 1977 to 2006/07, Statistics Commission, December 2008 In a week dominated once more by macroeconomic headlines it is important not to lose sight of some of the deeper structural changes taking place within our economy and society. The distribution of income and wealth and the extent to which the benefits of economic growth and development are dispersed across society remains one of the the most important issues facing every country - the UK is no exception. The Office of National Statistics has just released the latest data on household income and the inequalities of pre and post tax income across households from bottom to top of the income scale. The figures suggest that the progress made by Labour in reversing the steep rise in relative poverty from 1977 through to the turn of the 1990s has faltered. The BBC reports that the UK income gap ‘same as in 1991’. Britain continues to have above average levels of income inequality - our gini coefficient is the 9th highest in the European Union. The full report which is available as a pdf file can be downloaded here A2 Micro, AS Micro, Poverty and Inequality, 2008-12-17T23:05:33+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/panorama-addicted-to-aid http://www.tutor2u.net/blog/index.php/economics/comments/panorama-addicted-to-aid#When:14:52:01Z A heads up on a documentary ideal for those interested in development economics. Tonight at 8.30 the BBC series looks at the potential problems faced by aid dependent countries in Africa. See the preview here Poverty and Inequality, Development Economics, 2008-11-24T14:52:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-scale-and-depth-of-child-poverty http://www.tutor2u.net/blog/index.php/economics/comments/the-scale-and-depth-of-child-poverty#When:03:16:01Z It is one of those aspirations that seems synonymous with New Labour – a bold plan to abolish child poverty by 2020 and halve the risk of poverty by 2010. It is an aim that is almost impossible to achieve because of the lack of political will to devote the economic resources needed to bring it about. Government is happy to pledge tens of billions of pounds to bail out the financial system, but it seems less prepared to meet their pledges on poverty with hard cash. A2 Micro, AS Micro, GCSE Economics, Poverty and Inequality, 2008-10-01T03:16:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/income-inequality-and-growth http://www.tutor2u.net/blog/index.php/economics/comments/income-inequality-and-growth#When:22:56:01Z William Bernstein writes in a guest spot for the Freakonomics blog and considers how extreme income and wealth inequality can hinder growth and development in the long run. Quite apart from the increased burden of spending on defensive expenditure such as home security, prison guards and home and contents insurance - when the gap between the haves and the have-nots reaches staggering levels there is a real fear that respect for property rights is fundamentally undermined. “The paradox of economic growth is that the same mechanisms that create great wealth –secure property rights and rule of law guaranteed by an independent judiciary — also give rise to great inequalities in its distribution. Private property provides a powerful incentive to produce wealth for oneself while simultaneously denying that same wealth to others. Wealth does trickle down to the rest of the population, but often not fast enough to avoid political strife and worse.” The remainder of his post is here A2 Macro, Economic Growth, Poverty and Inequality, 2008-08-29T22:56:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/globalisation-and-the-skills-bias-of-world-trade http://www.tutor2u.net/blog/index.php/economics/comments/globalisation-and-the-skills-bias-of-world-trade#When:07:03:01Z The latest edition of the Economic Journal contains new research by Paolo Epifani and Gino Gancia that focuses on the skills preium for highly skilled workers in an age of globalisation. Whilst increasing economic integration between countries has undoubtedly contributed to a process of income convergence across nations, one of the paradoxes it that it can also lead to greater pay and earnings inequalities within countries - this research helps to explain why. “Since the mid-1970s, the wage gap between high-skilled and low-skilled workers has widened. At the same time, world trade has increased dramatically: between 1980 and the late 1990s, the share of countries ‘open to trade’ rose from 35% to 95%, and the volume of trade of the average country rose from 59% of national income to 74%....Globalisation increases the size of the market firms can access. Some industries can take advantage of a larger market more easily than others as they benefit from ‘economies of scale’.The study argues that those industries that take advantage of a larger market are more likely to employ skilled workers, and so the wages of skilled workers will rise faster than unskilled workers in a period of globalisation.” The rest of the media briefing on this new research is available here A2 Macro, Emerging Economies, Development Economics, Global Economy, Labour Market, Poverty and Inequality, 2008-08-08T07:03:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/tuc-calls-for-minimum-wage-for-apprentices http://www.tutor2u.net/blog/index.php/economics/comments/tuc-calls-for-minimum-wage-for-apprentices#When:06:31:00Z The Trades Union Congress (TUC) is lobbying for the UK government to extend the statutory minimum wage to cover apprentices as an intervention designed to improve incentives and combat employer exploitation of younger workers. Their submission to the Low Pay Commission can be found here. What was striking to me about their report was the low completion rates for apprenticeship schemes for those workers not covered by pay floor legislation. And also the persistent gap in apprenticeship pay between males and females. It is an area of the labour market where monopsonistic employment practices are prevalent and damaging to the long term skills base of the economy. “The TUC believes that bringing all apprentices under the NMW enforcement regime is the most effective way of addressing low pay and tackling the minority of employers that treat apprentices as cheap labour. Recent Government data revealed that five per cent of apprentices received less than £80 a week and 12 per cent received no pay at all.” The current minimum wage rates are £3.40 for 16-17 year olds, £4.60 for 18-21year olds and £5.52 for people aged 22+. Here is the TUC’s submission A2 Micro, AS Micro, Government Intervention, Minimum Prices, Labour Market, Poverty and Inequality, 2008-08-08T06:31:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unjust-rewards http://www.tutor2u.net/blog/index.php/economics/comments/unjust-rewards#When:06:27:00Z Polly Toynbee and David Walker from the Guardian have a new book out this week - available on Amazon - which looks at the depth of inequality in modern Britain. “The top 10% of income earners get 27.3% of the cake, while the bottom 10% get just 2.6%. Twenty years ago the average chief executive of a FTSE 100 company earned 17 times the average employee’s pay; now it is more than 75 times. Since Labour came to power in 1997 the proportion of personal wealth held by the top 10% has swelled from 47% to 54%.” A gross income of just under £40,000 is sufficient to get you into the top decile of the income distribution (making an adjustment for household size). The book will be a timely reminder that - eleven years into a Labour government committed to a mild form of redistribution through policies such as New Deal, tax credits and the minimum wage, there are incredibly powerful forces that drive inequality higher in modern economies.  One way of measuring income inequality is to use the gini coefficient - the latest figures for the UK are available here.. A2 Micro, AS Micro, Government Intervention, Poverty and Inequality, UK Economy, 2008-08-04T06:27:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/making-both-ends-meat http://www.tutor2u.net/blog/index.php/economics/comments/making-both-ends-meat#When:18:26:00Z Two minimum wage stories A Sheffield butcher has become the first employer to be prosecuted for not paying the minimum wage to its employees -  this BBC report covers the story - Jackson, from Pontefract, and Smout, from Sheffield, were charged with non payment of minimum wage and failing to keep adequate pay records.  Reading between the lines, I was surprised to read that so few prosecutions have been brought forward since the NMW came into force in April 1999. And today BBC London exposes the Hard Rock cafe for paying a basic wage of just £2.06 an hour in a story linked to the debate about whether restaurants are routinely using customer tips to supplement the wages of their workers. The current minimum wage stands at £5.52 for workers over 22 years of age. If you worked 48 hours a week, that translates into £13,772 a year - a few weeks ago, the Joseph Rowntree Foundation published survey research which indicated that a single person in Britain today needs to earn at least £13,400 a year before tax to afford a basic but acceptable standard of living.       A2 Micro, AS Micro, Government Intervention, Labour Market, Poverty and Inequality, 2008-07-18T18:26:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/meeting-basic-needs-and-wants http://www.tutor2u.net/blog/index.php/economics/comments/meeting-basic-needs-and-wants#When:23:22:00Z According to a fresh report from the Joseph Rowntree Foundation “According to members of the public, a single person in Britain today needs to earn at least £13,400 a year before tax to afford a basic but acceptable standard of living. The minimum income is above the official “poverty line” of 60% median income, for nearly all household groups. This shows that almost everybody classified as being in poverty has income too low to pay for a standard of living regarded as “adequate” by all members of the public who took part in this research.” This research will be terrific to use in the classroom when teaching about living standards, positive and normative statements, and disagreements between people about what constitutes a modest but adequate income required to meet our daily needs and wants. Crucially it tries to identify how we should define a minimum income standard. “A minimum standard of living in Britain today includes, but is more than just, food, clothes and shelter. It is about having what you need in order to have the opportunities and choices necessary to participate in society. The minimum seeks to exclude items that may be regarded as ‘aspirational’ – it is about fulfilling needs and not wants.” The full copy of the research is available here in pdf format   A2 Macro, AS Macro, Poverty and Inequality, Standard of Living, 2008-07-01T23:22:00+00:00