Income Inequality and Poverty
This chapter discusses several definitions of income before researching the causes of income inequality. It evaluates different methods of measuring income inequality and analyzes the ramifications of using an absolute or a relative measure of poverty. The chapter examines the effects of poverty on children, women, and ethnic minorities. It explains the second mode of distribution because it is directly linked to the problem of poverty. The chapter explains income as the command over resources, and poverty as insufficient command over resources. Teenage pregnancy is almost a guarantee that a young woman and her child will fall into multigenerational poverty. Income inequality is not a sign of a dysfunctional economy nor is increased inequality a sign of an infirmed economy. In addition, family structure, as well as changes in taxes and transfer payment policies, increase income inequality. Finally, the chapter analyzes policies that were designed to improve the lives of low-income people.