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Chapter 30: Q.16 (page 691)

During the past decade, many members of the baby boom generation have passed through ages ranging from the middle 40s to the late 50s. Do you suppose that the fact that there have been more members of this generation than other generations in the population during this past decade tends to imply that there was higher or lower measured inequality over the period? Why?

Short Answer

Expert verified

The population during this past decade tends to imply that there was lower measured inequality over the period

Step by step solution

01

Given Information

Lorenz bend is the realistic technique for concentrating on scattering. Showing the degree of takeoff scattering between equivalent circulation and genuine appropriation of a variable is utilized.

02

Explanation

More individuals in the age mid-40s to late50s were in the populace somewhat recently. They were in their pinnacle procuring period. So there was less inequality as a higher total level of income was in the hand of a higher combined level of the populace. In this way, the Lorenz bend was nearer to the line of fairness.

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Most popular questions from this chapter

a. What is the value of the Gini coefficient if area B is twice as large as area A?

b. Suppose that the Lorenz curve becomes more bowed, with the result that area B becomes exactly the same size as area A. What will be the new value of the Gini coefficient?

Suppose that a nation has implemented a system for applying a tax rate of 2 per cent to the incomes earned by the 10 per cent of its residents with the highest incomes. All funds collected are then transferred directly to the 10 per cent of the nation's residents with the lowest incomes. What is the general effect on the shape of a Lorenz curve based on incomes after collection and redistribution of the tax?

Distinguish among alternative approaches to measuring and addressing poverty.

Explain why the productivity standard for the distribution of income entails rewarding people based on their contribution to society's total output. Why does the productivity standard typically fail to yield an equal distribution of income?

Consider the graph nearby, which depicts Lorenz curves for countries X, Y, and Z.

a. Which country has the least income inequality?

b. Which country has the most income inequality?

c. Countries Y and Z are identical in all but one respect: population distribution. The share of the population made up of children below working age is much higher in country Z. Recently, however, birthrates have declined in country Z and risen in country Y. Assuming that the countries remain identical in all other respects, would you expect that in 20 years the Lorenz curves for the two countries will be closer together or farther apart? (Hint: According to the age-earnings cycle, what typically happens to income as an individual begins working and ages?)
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