Global inequality - Measuring economic inequality
4 important questions on Global inequality - Measuring economic inequality
How does GNI differ from GDP?
Comparing countries on the basis of income alone (using GNI) may mislead.
Why is this the case?
- Non-cash transactions are not included in GNI, even though this is still widely used, especially in low-income countries.
- GNI doesn't take into account what things cost, i.e., how much you can actually buy with a gross national income in that country.
- They don't tell much about the quality of life.
GNI does not take into account how much things actually cost in a country. Which tool does actually take this into account?
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Fertility rates tend to be higher in low-income countries than elsewhere. Can you explain this?
- Large families have a bigger economic benefit in lower-income countries, because they provide additional labour or otherwise contribute to family income.
- In wealthy industrial societies, children are more likely to be in school than working, which annuls the economic benefit.
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