Income Distribution and Poverty (1).docx - Income...

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Income Distribution - limitations and interpretations How to measure – plotting Lorenz curves, Gini coefficient, Relationship between Per Capita GNP and distribution – Kuznets Inverted U hypothesis Causes of Inequality – distribution of assets, historical causes Inequality and growth - traditional view, growth is more important than distribution, more inequality, higher savings and faster growth. - Modern view, inequality bad for three reasons 1. Inefficiency in credit allocation, poor educational outcomes, low growth 2. Social and political instability 3. Preferences – most people prefer lower levels of inequality and thus welfare is likely to be higher with more equal distributions of income Strategies 1. Altering functional distribution through minimum wage laws, usury laws etc 2. Altering size distribution through asset redistribution, land reform 3. Progressive tax and transfer programs Has Global inequality increased – new data suggests NO.
Poverty 1.

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