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Another significant feature of the data is the range in the
purchasing power of different countries compared to the poverty
line. While Australia (the highest) lies at 2521%, India (the
lowest) lies at 27% producing a range of 2494%.
2) Market failure is when there is a misallocation of resources
within a market. Two factors which can cause markets to
fail about provide adequate pensions are information
failure, and the potential positive externalities that could
be associated with pensions if brought under state control.
Information failure towards the consumers can cause this
market to fail as they will be unaware of the potential
benefits awaiting them. This asymmetrical distribution of
information means that people are unaware of the need for
pensions, or do not know at what age they will need them,
therefore are more likely to partake in fulfilling their
immediate wants and needs rather than saving for the
future.
In addition, the potential positive externalities associated
with the state provision of pensions can be another cause
for market failure. The positive effects of pensions make
them resemble a merit good, which we can argue, should
be provided by the state. However, in private hands the
provision of pensions is not being optimised.
3) The definition of a national minimum wage is when a
government implements a policy that defines the lowest amount
a worker can be paid per hour. Welfare benefits are benefits
provided to those in disadvantaged situations as compared to
the rest of the population (those in relative poverty). Poverty can
be defined in two ways: absolute (which has currently been
eliminated in the UK), and relative. Absolute is when a person
does not have enough money to provide for their basic needs:
water, food and shelter, however relative poverty is when basic
needs are affordable, however at a lower quality than to others in
the same society.
An advantage of increasing the national minimum wage is that it
incentivises people to lift themselves out of poverty and find
work (had they previously been content with living off benefits).
In addition, it decreases the amount of poverty in the working
population by giving them increased disposable income,
therefore decreasing relative poverty. By increasing the national