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chapter 15 - Chapter 15 Lorenz curve shows the proportion...

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Chapter 15 Lorenz curve - shows the proportion of income going to each part of the population (graph on back of paper). Gini Ratio (Gini Coefficient or Gini Index)- is the best known measure of inequality in an income distribution. You can get the ratio by dividing ABCD by the area of the triangle ACE. Some of the inequality in annual incomes is just due to the fact that people are of different ages. Typically older people earn more. The distribution of lifetime income for the people born in a particular year is much more equal than the distribution of annual income=> some people have good and bad years, over a lifetime they equal out. Reasons for decreases in demand for workers with only HS education and for HS dropouts in the 1980’s: Technology change- example: increased use of computers Competition from abroad- imports affected mostly manufacturing workers The shift from manufacturing to services-portion of economy devoted to manufacturing
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