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L6 Sept 20 - Poverty and the Economy 1 Real GDP per capita...

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Poverty and the Economy 1
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Real GDP per capita and poverty, 1959 to 2007 0 5 10 15 20 25 30 35 40 45 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 Real GDP per capita ($1000) 0 5 10 15 20 25 Percent of people in poverty Real GDP per capita ($1000s) % of people in poverty 2
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Real GDP per c 0 5 10 15 20 25 30 35 40 45 1959 1964 1969 1974 Real GDP per capita ($1000) Real GDP per c 1960s: Strong economic expansion and dramatic decline in poverty 3
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per capita and poverty, 1959 to 2007 1974 1979 1984 1989 1994 1999 2004 0 5 10 15 20 25 Percent of people in poverty per capita ($1000s) % of people in poverty POVERTY 1973-1993: Fluctuated 1993-2000: Big 2000-2007: Slight 4
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Link between poverty and economy Tied to Growth in employment Changes in wages Distribution of both 5
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Decline in Wages Among Low-Wage Workers Three explanations Demand factors Technological change International trade Supply factors Education of workers Immigration Institutional factors (non-market) Decline in unions Decline in minimum wage 6
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Labor Market Supply (workers in the labor market) Q W Demand (jobs available) Employment level Wage 7
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Labor Market Supply Q W Demand Employment level Wage Economic growth Wage* E* 8
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