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income distribution - Coggle Diagram
income distribution
income tax
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Result: if an income tax system is progressive, the after-tax distribution of income is more equal
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minimum wage legislation
Result: decreased income inequality (the lowest-paid workers are better off, and the richest doesn't earn more)
Limitations: higher wages once introduced are almost impossible to reverse (sticky downwards), higher costs of production, producers are reluctant to hire more workers, it is more difficult to find a job, more people working not registered
Benefits: financial stability of the lowest-paid, protection of economic well-being of workers
universal basic income
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Limitations: too expensive to carry out, potential reduction in other social services e.g. transfer payments, potential incentive not to work
Benefits: administratively simple to carry out, support of diverse groups, more freedom for workers to leave jobs they are unhappy with, stabilising economy during a recession by providing income to the unemployed