中级微观经济学chap020.ppt

Who Gets What?The Distribution of Income Chapter 20 Laugher Curve Two economists were walking down the street when they noticed two women yelling across the street at each other from their apartment windows. Laugher Curve “Of course they will never come to an agreement,” stated the first economist. Ways of Considering the Distribution of Income In the 1800s, when social classes were more distinct than today, it was possible to classify wealth as to its origin. Rents for landowners. Profits for business owners. Wages for workers. Ways of Considering the Distribution of Income Today with social class distinctions so blurred it no long makes sense to classify income as to source. Ways of Considering the Distribution of Income Economists measure income distribution in two ways: The Share Distribution of Income The share distribution of income measures aggregate family income by quintile. The Lorenz Curve A Lorenz curve is a geometric representation of the size distribution of income among families in a given nation at a given time. The Lorenz Curve It measures the cumulative percentage of families on the horizontal axis, arranged from poorest to richest, and the cumulative percentage of family income on the vertical axis. The Lorenz Curve Both axes start at zero and end at 100 percent. The Lorenz Curve All real-world Lorenz curves are below the diagonal since income is always distributed unequally. Lorenz Curve of U.S. Income for 1998 U.S. Income Distribution Over Time From 1929 to 1970, income inequality in the U.S. decreased. From 1970 to 1998, it increased. U.S. Income Distribution Over Time Important reasons for increases in equality up to 1970 include the following: Welfare programs Unemployment insurance Social security U.S. Income Distribution Over Time Important reasons for increases in equality up to 1970 include the following: Progressive taxation (taxing higher incomes at higher rates, lower incomes at lower rates) Improved macroeconomic performance of the