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Unformatted text preview: How do we measure this degree of equality or inequality? Economists often measure income equality by measuring how much income is earned by different segments of the population. For instance, if we break down all workers into five segments in terms of how much money they make: the top 20%, the second 20%, the third 20%, the fourth 20%, and the bottom 20%, and we obtain data on how much money they make, we can then create a chart detailing how much income each segment earns out of the total amount of income for all workers. The bigger the difference between the different segments, the greater the income inequality. Let's say that the average incomes for five segments in a society are $10,000, $24,000, $50,000, $80,000, and $110,000. In order to look at income distribution, we need to see what percentage of total income each segment makes, rather than the actual amount of...
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This note was uploaded on 12/13/2011 for the course ECO 1320 taught by Professor Staff during the Fall '11 term at Texas State.
- Fall '11