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Chapter 15: Q.27 (page 378)

What are the main reasons economists give for the

increase in inequality of incomes?

Short Answer

Expert verified

-Change in the household structure

-The shift in an allotment of pay

-Education

Step by step solution

01

Step 1. Meaning

Income inequality

Income inequality is difference in distribution of income among individuals within country.

02

Step 2. Reason

Change in the household structure

The involvement of married women in the labor workforce leads the trend of more households having two earners.

two high earners tended to increase the proportion of high-earning households. these also lead to single-parent households & changed household structure that leads to inequality of income.

03

Step 3. Reason

The shift in an allotment of pay

High skilled workforce outdated low skilled workforce,

the earnings of high skilled labor increased as compared to low skilled labor because high skilled laborers have the advantage of an understanding of technology that enhances their earing.

04

Step 4. Reason

Education

Educationis essential in every aspect, the population with better education gets a better opportunity with better income as compared to any person with less education.

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Most popular questions from this chapter

What goods and services would you include in an

estimate of the basic necessities for a family of four?

Describe how a push for economic equality might

reduce incentives to work and produce output. Then

describe how a push for economic inequality might not

have such effects.

Who are the near-poor?

What is the safety net?

The poverty rate would be substantially lower if the market value of in-kind transfers were added to family income. The largest in-kind transfer is Medicaid, the government health program for the poor. Lets say the program costs \(10,000 per recipient family.

a. If the government gave each recipient family a \)10,000 check instead of enrolling them in the Medicaid program, do you think that most of these families would spend that money to purchase health insurance? Why? (Recall that the poverty level for a family of four is about $25,000.)

b. How does your answer to part (a) affect your view about whether we should determine the poverty rate by valuing in-kind transfers at the price the government pays for them? Explain.

c. How does your answer to part (a) affect your view about whether we should provide assistance to the poor in the form of cash transfers or in-kind transfers? Explain.
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