Lecture_25___inequality

Lecture_25___inequality - December 3 2008 Inequality and...

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December 3, 2008 Inequality and Social Policy
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Exam Date: 12/16 2-4:30pm G71 MVR
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Big issue: Inequality Why is it important? How do we measure it? Why has it changed? What can we do about it? Reduce poverty Good workers? Good jobs? Good government?
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Why is inequality important?
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Why is inequality important? Functionalist perspective – inequality motivates people to work harder, which benefits everyone, including those at the bottom of the income distribution Relative deprivation – people compare themselves to others – may foment civil unrest? “Social Exclusion” Rich bid up the price of goods and services, which make them less affordable for those at the bottom. Examples? Inequalities translate to inequalities on many other noneconomic outcomes. Going to college, life expectancy, getting married, crime and incarceration, political influence, living in a good neighborhood, having access to good health, etc. RSF initiative and book
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Has Inequality Increased? Measures of Inequality
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90/10 Ratio of income at 90 th percentile to 10 th percentile 1959 – 8.2 1969 – 7.3 1979 – 7.5 1989 – 9.1 1999 – 9.6
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Source: Lichter et al. 2007. In Handbook of Family Poverty .
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Income share
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Gini Where ( Xk , Yk ) are the known points on the Lorenz curve, with the X k indexed in increasing order ( X k - 1 < X k ), so that: Xk is the cumulated proportion of the population variable, for k = 0,...,n, with X0 = 0, Xn = 1. Yk is the cumulated proportion of the income variable, for k = 0,...,n, with Y0 = 0, Yn = 1.
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