Understanding economic inequality
Understanding economic inequality

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

Free course

Understanding economic inequality

6.2 Provision of goods such as education and healthcare

Access to education for all income levels enhances equality of opportunity. By undertaking training to learn new skills workers can improve their earning potential by adding to their human capital.

Those on low incomes might not be able to afford to undertake education or training, and so would not have the same opportunities as those on higher incomes. Therefore, provision of universal education by the government would allow greater opportunity for those on low incomes to increase their human capital.

Increased spending by the government on health services also benefits those on low incomes as improved healthcare enables workers to keep working.

Activity 14 Taxes and government spending

Timing: Allow about 15 minutes

Figure 21 shows tax payments (below zero on the vertical axis) and benefits (above zero on the vertical axis) as a proportion of disposable income of households in different quintile groups in 2017.

Figure 21 Taxes and benefits across income distribution

Which quintile group benefits the most from state provided education and the NHS?

To use this interactive functionality a free OU account is required. Sign in or register.
Interactive feature not available in single page view (see it in standard view).

Answer

The bottom quintile of the population receives in relative terms the highest benefit from education as shown by the green area in Figure 21. This becomes progressively smaller the higher the quintile group. The benefits of the NHS follow a similar pattern.

How do you think this affects inequality?

To use this interactive functionality a free OU account is required. Sign in or register.
Interactive feature not available in single page view (see it in standard view).

Answer

The lower quintiles benefit to a greater extent from state provided health and education. This would have the impact of reducing inequality as the standard of living of the lower quintiles are improved relatively more than the higher quintiles. This helps to produce more equal living standards across society.

DD126_1

Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to University-level study, we offer two introductory routes to our qualifications. You could either choose to start with an Access module, or a module which allows you to count your previous learning towards an Open University qualification. Read our guide on Where to take your learning next for more information.

Not ready for formal University study? Then browse over 1000 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus371