INEQUALLITY IN THE DISTRIBUTION OF INCOME AND WEALTH

Factor incomes or factor rewards are rarely if ever distributed equitably in any country. Indeed it is a fact of life that the distribution of income and wealth in the UK is highly unequal there is a huge gap between the richest and poorest households in our society. For example, the latest available data shows that 94% of the total wealth in this country is held by 50% of the population. Put another way, the other half of our population can lay claim to only 6% of total wealth. Millions of people must rely on relatively low incomes with little opportunity to accumulate wealth.

WEALTH

Wealth

Wealth is defined as a stock of assets that creates a flow of income and it can be held in a variety of forms by individuals, firms and also the nation as a whole:

• Financial wealth - stocks and shares, bonds, savings in bank and building society accounts and contributions to pension schemes.
• Marketable wealth - consumer durables that can be sold for a price e.g. rare antiques.
• Social capital – including social infrastructure such as transport systems, schools and hospitals.

It is important to distinguish between income and wealth. For example, if you receive a higher wage or salary from your job then this adds to your monthly income and if this is saved in a bank, or by making contributions to a pension fund then you are adding to your financial wealth. 

Being wealthy can also generate income for if you own shares in companies listed on the stock market then you expect to receive dividend income once or twice a year. And if you have money in a savings account, you will be paid interest on your savings balances. Likewise, if you own properties, then you can earn some income from renting it out to tenants

INCOME

Income

Income represents a flow of earnings from using factors of production to produce an output of goods and services which are then sold in markets. The main sources of income for individuals and households are:

1. Wages and salaries from work often supplemented by overtime and productivity bonuses.
2. Interest from savings held in banks, building societies and other accounts.
3. Dividends from share ownership.
4. Rent income from the ownership of property.

For the majority of people, most of their weekly or monthly income comes from their job. The government can also affect people’s disposable (or “post-tax”) income by taxing incomes and by giving welfare benefits to households on low incomes or to people who are out of work.

RENEWABLE RESOURCES

These are commodities such as solar energy, oxygen, fishstock,etc that is replaceable providing that the rate at which they are extracted is less than the natural rate at which the resources renew itself. This is becoming an enormously important issue in enviromental economics, for example the overextraction of fish stocks, and the global risks of permanent water shortages resulting from rising use of ground water stocks.Finite resources cannot be renewed.For example with plastics,crude oil,coal,natural gas and other items from fossil fuels,no mechanism exists from fossil fuels replenishes them.

FACTORS OF PRODUCTION

LAND
This are the natural physical resources that are available for production.This includes a wide range of things such as mineral deposits like oil and coal,the earth's rivers and lakes.It can also be use to describe the natural resources such as sea,sand and sun that have been so important for the development of tourism and leisure activities.

LABOUR
This is the human resource that is available in any economy.The quality and quantity are really important considerations.Some economies,particularly the world's poorest countries, often have large populations but suffer from lack of a welltrained and well educates workforce.Other countries such as Germany and Italy,have declinig populations and rely on immigrant workers to do both skilled and unskilled jobs.

CAPITAL
This is a form of physical resource covering anything that can be regarded as manmade aid for production.Its fuction is to combine with land and labour to produce goods and services that are required by the population.It includes items such as factories,office blocks,machinery,information technology,infrastructure and so on.

ENTREPRENEURSHIP
This is a very particular form of human capital.It has to main functions.First,it refers to enterprise whereby the other factors of production are organised in order to produce goods and services.Second,it refers to the ability and inventiveness of those who are prepared to take risks.

ECONOMIC RESOURCES

 Micro-economics is the study of the behaviour and decisions of individuals and business in markets across the economy.In economics,goods can be classified as tangible or intangible.While tangible goods are things like cloths,foods,drinks,cars,etc.intangible goods are services such as education,healthcare,business consultancy,etc.