The Rising Income Gap
Austero. Encinares. Lim. Ramos
GAME
MANY PICS 1 WORD
TYPES OF
ECONOMIC
INEQUALITY
2 TYPES OF ECONOMIC INEQUALITY
1. Income Inequality - used to fund day-to-day
expenditures
What is income?
- income is money that an - people aged 65 and under
individual or business typically receive the
receives in exchange for majority of their income
providing a good or service from a salary or wages
or through investing capital earned from a job
2 TYPES OF ECONOMIC INEQUALITY
1. Income Inequality - often presented as the
percentage of income to a
What is income inequality?
percentage of population
- income inequality is the
unequal distribution of
household or individual
income across the various
participants in an economy
2 TYPES OF ECONOMIC INEQUALITY
2. Wealth Inequality - determined by taking the
total market value of all
What is wealth?
physical and intangible
- wealth measures the value of assets owned, then
all the assets of worth owned subtracting all debts
by a person, community,
company or country - essentially, wealth is the
accumulation of resources
2 TYPES OF ECONOMIC INEQUALITY
2. Wealth Inequality
What is wealth inequality?
- wealth inequality (also
known as the wealth gap)
is the unequal distribution
of assets among residents
of a particular community
POVERTY & EQUITY
POVERTY & EQUITY
Poverty Equity
- poverty is a state or condition - equity (also known as
in which a person or economic equality) is the
community lacks the financial concept or idea of fairness
resources and essentials to in economics, particularly
enjoy a minimum standard of in regard to taxation or
life and well-being that's welfare economics
considered acceptable in
society
POVERTY & EQUITY
Relationship
- economic globalization implies economic integration among
countries, brought about by the movement of goods, services,
technology and factors of production
- directly affecting relative factor earnings between and within
countries, and ultimately impacting economic growth and income
inequality
- this now renewed not just the issues in inequality but also in
poverty
When did income inequality start?
When did income inequality start?
Industrial Revolution
- Income inequality boosted in 1820s.
- Machines increased productivity
- The overall amount of goods and services produced
expanded dramatically, and the proportion for capital
invested per worker grew.
How is income distributed?
INCOME DISTRIBUTION
national income distributed over the population
6.60% 10.30% 14.50% 21.40% 47.30%
BOTTOM FIFTH SECOND FIFTH MIDDLE FIFTH FOURTH FIFTH TOP FIFTH
POOREST RICHEST
Factors that affect Income Inequality
Globalization and Trade
- represents global
integration of international
trade, investments,
information technology,
and cultures.
Factors that affect Income Inequality
Government Policies
- are designed to open
economies domestically
and internationally
How to measure Income Inequality
Problems in measuring Income Inequality
In-kind Transfers
- transfers to the poor given in the
form of goods and services
rather than cash
Problems in measuring Income Inequality
The Economic Life Cycle
- the regular pattern of income
variation over a person’s life
Problems in measuring Income Inequality
Transitory vs Permanent
Income
- Transitory income means not
permanent but temporary in
nature.
- Permanent income means a
person’s normal income.
PHILIPPINE
SETTING
Rising income gap in the Philippines
● SM Group Founder
● Still the #1 richest Filipino
according to Forbes (2018)
<Since 2005>;
● #52 Richest in the world
(below him is Tesla Inc.)
● Net Worth is at $19.6B
● Life Story
Henry Sy
● Poverty is one of the most
severe problem in the
Philippines.
● Farmers, Fishermen and
Children are the poorest.
● One in Every Ten Filipinos
Aged 6 to 24 Years is an Out
of School Child and Youth.
People living
● Some went to the city
because of the “city
mindset”.
under the bridges
Why is the rich And why is the
getting richer poor getting
every year? poorer every
year?
Defenders of the status
quo would say the rich
uses their talents while
the poor doesn’t but..
THE REAL ANSWER IS...
CAPITALISM
CAPITALISM
● The government plays a secondary role. People and companies
make most of the decisions, and own most of the properties.
● Goods are usually made by companies and sold for a profit.
● The means of production are largely or entirely privately owned
and operated for profit.
● Free market economy. (Prices go up and down depending on the
availability of the product.)
ADVANTAGES AND DISADVANTAGES
Disadvantages of Capitalism
Advantages of Capitalism
1. Inequality in the distribution of national
1. Reduction in cost of production due to
wealth
efficient control
2. Fluctuations in the level of employment
2. Efficient control of production process
3. Class conflicts
3. Improved quality of goods
4. Heavy expenses on publicity result into
4. Consumer’s choice is given full weight
increase in cost and price of the
5. Varieties of products commodity
Continuation..
● Promotes inequality
● Starvation
● Health problems
● Undemocratic
● Propaganda
PH as 3rd in Crony
Capitalism
Phil Star 2016
Crony Capitalism
● The use of one’s power or connection to gain
wealth without actually “making” wealth.
● Examples: corruption, bribery, and extortion.
TRAIN
LAW
Tax Reform for Acceleration and Inclusion
Main changes are:
1. Lowering the personal income tax
2. Simplifying transfer taxes (Donor’s tax, Estate tax)
3. Further Expanding the Value Added Tax
4. Increasing excise taxes on certain goods.
JEEPNEY DRIVERS,
SIDE VENDORS, ETC.
UCD by DSWD
Unconditional Cash Transfer
200 per month to 10M Filipinos (2018)
300 per month (2019-2020)
Poverty incidence
is the proportion
What is Poverty of the population
Incidence? with per capita
Does it matter? income less than
the per capita
poverty threshold
Poverty Incidence in the Philippines
● Farmers, Fishermen and Children consistently posted
the highest poverty incidence among basic sectors - PSA
● Poverty incidence among Filipinos registered at 26.3%,
as of first semester of 2015 - PSA
Income gap measures the
average income required
by the poor in order to get
Income Gap out of poverty (expressed
relative to the poverty
threshold). Income gap is
a measure of depth of
poverty.
Income Gap in the Philippines
● Income of families were short by 29.0% of the poverty threshold
● An additional monthly income of Php 2,649 is needed by a poor
family with five members in order to move out of poverty
● Minimum income
required for a
family/individual to
POVERTY LINE
meet the basic food
and non-food
requirements
POVERTY LINE IN THE PHILIPPINES
● In 2015, a family of 5 needed at ● A Filipino needed at least Php
least Php 9,064 on average 1,813 on average monthly to
monthly to meet both basic food meet both basic and non-food
and non-food needs. needs.
● 16.5 % of Filipino families were ● 1 in 5 Filipinos was poor in 2015
poor, which is 3.8 million Filipino ● There were 21.9 million poor
families Filipinos in that year
SOLUTIONS TO
REDUCE INCOME
INEQUALITY
SOLUTIONS TO REDUCE INCOME INEQUALITY
- Require and monitor all tax payers to
pay the right amount on time, most
especially in the political and
business industry to avoid tax wealth
- Social wealth in the form of free
education, universal health care, roads
& highways and other necessities of
this nation should be maintained
SOLUTIONS TO REDUCE INCOME INEQUALITY
- Raise the salary of the workers and give them all the benefits
that they deserve; end contractualization
- If the private market fails to provide enough jobs to achieve full
employment, the government must become the employer of last
resort ained
SOURCES:
ICON SOURCES: [Link]
[Link]
<div>Icons made by <a
href="[Link] Mankiw. Principles of Economics.
title="Freepik">Freepik</a> from <a
href="[Link] [Link]
title="Flaticon">[Link]</a> is s-during-industrial-revolution/
licensed by <a
[Link]
href="[Link]
stat_FINAL.pdf
3.0/" title="Creative Commons BY 3.0"
target="_blank">CC 3.0 BY</a></div>
[Link]
mong-filipinos-registered-263-first-semester-201
5-psa