Practise explaining income and wealth inequality through skills, unemployment, discrimination, asset ownership and policy, then judging its household and economy-wide effects.
Explain the possible economic reasons for inequality of income and consider whether inequality of income can benefit an economy.
Follow the point-based marking guidance at the top of this mark scheme and award:
up to 3 marks for AO1 Knowledge and understanding up to 3 marks for AO2 Analysis
up to 2 marks for AO3 Evaluation.
AO1 Knowledge and understanding (max 3 marks)
A clear knowledge and understanding of at least two possible economic reasons for inequality of income, such as whether a person is in employment or unemployed (1), the skills, qualifications and experience of different workers in various occupations and economic sectors (1), whether workers are employed in the public sector or the private sector (1), whether they are employed full-time or part-time (1), the provision of transfer payments (1) and the level and type of taxation. (1) N.B. the question does not stipulate how many reasons should be referred to so two reasons well explained can gain up to 3 marks. 1 reason explained can achieve a maximum of 1 mark.
Marking guidance:
Max 3 marks
AO2 Analysis (max 3 marks)
The focus of this analysis must be on whether income inequality generates benefits to an economy or not.
Points may include:
- Incentivising workers leading to higher levels of productivity
- Encourages enterprise
- Encourages workers to retrain/reskill
- Demotivates those on the lowest incomes and an increase in crime
- Increased government spending on transfer payments leading to an opportunity cost
Max 3 marks
AO3 Evaluation (max 2 marks)
Offers a valid judgement on the extent to which inequality of income can benefit an economy (1) to reach a conclusion. (1)