Between 2007 and 2022 income inequality increased in both Sweden and the USA. Evaluate possible causes of an increase in income inequality within a developed country of your choice.

Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the general marking guidance. The indicative content below exemplifies some of the points that candidates may make but this does not imply that any of these must be included. Other relevant points must also be credited.

QS9: Interpret, apply and analyse information in written, graphical, tabular and numerical forms.

Knowledge, Application and Analysis (12 marks) - indicative content
- Understanding of income inequality
Possible causes include:
- Changes in wages of different groups including e.g. training and skills: wage differentials between the unskilled and skilled workers have been increasing; minimum wage increasing slower than average earnings/discrimination
- Education: the earnings of those with certain qualifications have increased at a much faster rate than others
- Disproportionate increase in earnings of top \(1 \%\) as a result of e.g. incomes of the asset-rich have increased relative to those who are asset-poor; could be due to exploitation of tax loopholes
- Pensions: especially amongst the elderly and ending of final salaries pension schemes; inflation for pensioners has been higher than the CPI rate as they spend a higher percentage of income on goods like council tax, fuel and food
- Tax rates, e.g. such as increases in indirect taxes (regressive taxes) / cuts in taxes on incomes and wealth (progressive taxes)
- Globalisation: the demand for, and wages of, unskilled workers have fallen relative to those of highly skilled workers in developed economies
- Immigration, e.g. of unskilled workers, putting downward pressure on wages for those on low incomes - appears to be a growing number of the low-paid immigrant workers, who work for cash and are paid much less than the NMW
- Trade union power has been eroded: an increasingly flexible labour market, with more workers being employed on part-time or zero-hour contracts, as opposed to full-time - they are not largely protected by the trade unions
- Macroeconomic policies, e.g. deregulation and privatisation that contributes to the concentration of ownership of assets
- Reduction in out-of-work benefits and/or the reduction of in-work benefits. Increase in inter-generational inequality in some countries where state pensions have been increased
- Increase in the rate/level of unemployment/decrease in the employment rate
- Global health crisis of 2020-2022 affecting younger workers more than older workers
- Monopoly power of firms (especially TNCs) / the monopsony power of firms
N.B. Award maximum of Level 3 ( 9 marks) if a candidate does not refer to a developed country in their answer
Evaluation (8 marks) - indicative content
- Prioritisation and significance of the causes discussed
- A combination of factors is likely to have a larger impact on income inequality
- Changes in inequality over time, e.g. discussion if the rise is significant over 10 years - different factors affect a country during different times
- Consideration of what is actually being measured, e.g. gross incomes or personal disposable incomes
- This takes no account of the changes in the distribution of wealth, which might be more significant than income inequality
- Unemployment rate may be more significant than level of skills and education or state benefits
- Differences may be explained by lifestyle rather than the causes above
- Globalisation has helped to reduce inequality through greater economic integration across national borders
- The significance of a cause will be different in different countries, e.g. depending on policies to redistribute income
- Data might be either inaccurate or unreliable as it is difficult to collect