SY404 Lecture Notes - Lecture 5: Redistribution Of Income And Wealth, Cultural Capital, Human Capital

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27 Jan 2013

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Human Capital theory:
-stresses the increasing centrality of education as a factor affecting economic success
-productivity gains can also result from investment in the skills and abilities of people
-knowledge intensive jobs are increasingly numerous in Canada
-better educated workers are more skilled and productive in these jobs
-part of reason why people w/ same amount of human capital may receive different economic rewards is that they
possess different amounts of social capital
-people more likely to succeed if have strong bonds of trust, cooperation, mutual respect and obligation w/ well-
positioned families
-a related reason of this argument is cultural capital
-emphasizes a set of social skills people have, their ability to impress others, to use language and images
effectively, and to influence and persuade people
-emphasizes your impression-management skills
-but also stresses connections and networks
-both concepts emphasize being part of the right “social club”
-also has the idea that families higher in social hierarchy enjoy more capital of all types
-culture and connections often influence who gets interviewed
Natural talentRewards
Natural talent + EffortRewards
Natural talent + Effort + Skill-rich environments + Developed skillsRewards
Natural talent + Effort + Skill-rich environments + Developed skills+ Social and cultural capitalRewards
Income versus Wealth:
-from the top 10 riches people or families, inheritance is a critical factor
-none of them rose from rags to riches
-suggests a mix of family fortune, business acumen, and opportunism as key determinants of wealth
-only a few acquire the wealth of major enterprises but most own assets (for most adults assets are cars,
appliances, furniture, and savings)
-some wealthier families own equity in a house and more fortunate ones about to accumulate stocks
and bonds
-bottom 40% of families own no assets and may owe more than they own
-top quintile have increased in wealth
-wealth inequality increasing rapidly in Canada (not as much as the USsurpass all industrialized
countries in wealth inequality)
-only a modest correlation with income and wealth (some wealthy people have low annual incomes)
-income redistribution has little to do w/ the distribution of wealth therefore, it may not get at the root
of economic inequality
Income and Poverty:
-the number of homeless people are increasing
-homelessness is one manifestation of poverty
-poverty lacks an agreed definition
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