Examine two likely causes of income inequality within the UK

Edexcel A-Level Economics Paper 2 June 2022 Extract

With reference to Figure 1 and Extract A, examine two likely causes of income inequality within the UK. (8 marks)

One explanation for the UK’s income inequality is poor transport and infrastructure. Poor transport makes it harder for people outside of London to access higher paying jobs inside London. The extract mentions that gross disposable household income was between £19,000 and £21,000 in London whereas gross disposable household income was between £13,000 and £13,999 in the North East.

Secondly, poor education contributes to income inequality. Poor or inconsistent state education leads to hugely differing levels of skills around the economy, meaning that not everyone can access high paying jobs.

However, progressive income taxes are in place to control the level of income inequality. As income increases, the proportion of income that is taxed also increases, which reduces the gap in net incomes between higher and lower earners.

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