1. GENERALPRINCIPLES OFINCOMEDISTRIBUTION

2. PERSONAL INCOMEDISTRIBUTIONthe distribution of income based onpersons or households whoparticipated in the generation of thenational income. 3. INCOME DISTRIBUTIONIncome distribution is the smoothness orequality with which income is dealt out amongmembers of a society. If everyone earnsexactly the same amount of money, then theincome distribution is perfectly equal. If no oneearns any money except for one person, whoearns all of the money, then the incomedistribution is perfectly unequal. Usually,however, a society's income distribution fallssomewhere in the middle between equal andunequal. 4. TRENDS IN INCOME INEQUALITYIncome Inequality- the unequal distribution ofeconomys total income among persons orfamilies in the economy 5. CAUSES OF GROWINGINEQUALITY1. Greater demand for highly skilledworkers2. Demographic changes3. International trade, immigration,decline in unionism 6. THE LORENZ CURVEThe Lorenz curve is a graph of thepercentage of total income obtained bycumulative percentages of families. It is aconvenient means of visualizing the degree ofincome inequality. Specifically, the area betweenthe diagonal (the line of perfect equality) and theLorenz curve represents the degree of inequalityin the distribution of total income. 7. LORENZ CURVELorenz curve(actualdistribution)abcdePerfect equalityCompleteinequality20 40 60 80 100Percent of incomePercentage offamiliesf100806040200 8. INCOME MOBILITYEconomic mobility is the ability of anindividual, family or some other group toimprove (or lower) their economic status usually measured in income. Economicmobility is often measured by movementbetween income quintiles. Economic mobilitymay be considered a type of social mobility,which is often measured in change in income. 9. GOVERNMENT REDISTRIBUTION,One of the basic functions of thegovernment is to redistribute income.Government significantly redistributesincome from higher to lower incomehouseholds through its taxes and transfer. 10. THE IMPACT OF GOVERNMENT TAXESAND TRANSFERS ON INEQUALITY20 40 60 80 100Percent of incomePercentage offamilies100806040200Lorenz curveafter taxes andtransfersLorenz curvebefore taxesand transfers 11. CAUSES OF INCOME INEQUALITY1. Ability Differences2. Education and Training3. Discrimination4. Tastes and Risks5. Unequal Distribution of Wealth6. Market Power7. Luck, Connections, and Misfortunes 12. EQUALITY VERSUS EFFICIENCY 13. THE CASE FOR EQUALITY: MAXIMIZINGTOTAL UTILITYIn any time period, income receivers spendtheir first dollars received on products theyvalue mostproducts whose marginal utility ishigh. As their most pressing wants becomesatisfied, consumers then spend additionaldollars of income on less important, lower-marginal-utility goods. 14. THE CASE FOR EQUALITY: MAXIMIZINGTOTAL UTILITYMUAUtilitygainMarginalutilityMUBUtility lossMarginalutilitybG Laa0$2500 $5000b0$5000 $7500Income(a)Income(b) 15. THE CASE FOR INEQUALITY:INCENTIVES AND EFFICIENCYThe tax and transfer process of incomediminishes the income rewards of high-incomeperson and raises the income rewards of low-incomeperson; in so doing, it reduces theincentives of both to earn high incomes. 16. THE EQUALITY AND EFFICIENCYTRADEOFFEconomic Efficiency- The relationship between the input ofscarce resources and the resulting output of agood or serviceEquality vs. Efficiency Tradeoff- the decrease in economic efficiency thatappears to accompany a decrease in incomeinequality; the presumption that an increase inincome inequality is required to increase. 17. THE ECONOMIC OF POVERTY 18. POVERTYPoverty is a condition in which a personor family does not have the means tosatisfy basic needs for food, clothingshelter, and transportation. 19. INCIDENCE OF POVERTYPoverty incidence is the proportion ofpopulation whose annual per capita incomefalls below the per annual per capitapoverty threshold to the total number ofpopulation. 20. POVERTY TRENDS (IN PHILIPPINES) Philippines' poverty line marks a per capita income of16,841 pesos a year. According to the data from theNational Statistical Coordination Board, more thanone-quarter (27.9%) of the population fell below thepoverty line the first semester of 2012, an approximate1 per cent increase since 2009.Poverty incidence among Filipinos eased to 24.9percent in the first semester of 2013, from 27.9 percentposted in the same period in 2012, the local statisticsagency said today. 21. POVERTY TRENDS (IN PHILIPPINES)The Philippine Statistics Authority (PSA) said in areport that poverty incidence among Filipino familiesalso slowed to 19.1 percent in January to June 2013,from 22.3 percent recorded in the same period in2012. "The faster growth of poor households' incomecompared with the slower increase of basic commodityprices implies a robust increase in real incomes of thepoor, which played a significant role in reducingpoverty during the period," said Balisacan. 22. THE INCOME MAINTENANCESYSTEM 23. SOCIAL INSURANCE PROGRAMSSSS (Social Security System)- is a social insurance program for workers in thePhilippines. It is a government agency that providesretirement and health benefits to all enrolled employeesin the Philippines. Members of the SSS can also make'salary' or 'calamity' loans. Salary loans depend on themonthly salary of the employee. Calamity loans are forsuch times when there is a calamity that has been sodeclared by the government, in the area where the SSSmember lives, such as flooding, earthquake and naturaldisasters. 24. SOCIAL INSURANCE PROGRAMSUnemployment compensation- money that substitutes for wages orsalary, paid to recently unemployed workersunder a program administered by a governmentor labor union. 25. PUBLIC ASSISTANCE PROGRAMPantawid Pamilyang Pilipino Program (4Ps)- a conditional cash transfer program of thePhilippine government under the DSWD. It aimsto eradicate extreme poverty in the Philippinesby investing in heath and education particularlyin ages 014. It is patterned on programs inother developing countries like Brazil (BolasFamilia) and Mexico (Oportunidades). 26. PUBLIC ASSISTANCE PROGRAMThe Philippine Health InsuranceCorporation (PhilHealth) was created in 1995to create a universal health coverage for thePhilippines. It is a tax-exempt, government-ownedand government-controlled corporation(GOCC) of the Philippines, and is attached tothe DOH.