Lecture 31 - Announcements HW 17 due tomorrow. MT3 practice...

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Announcements HW 17 due tomorrow. MT3 practice problems on Scholar Monday is review (and a little more about income distribution) MT is Wednesday (chs 11-18). Won’t do all these slides today (may not get to any!). These are the last slides I will post before the exam.
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CH 18: INCOME DISTRIBUTION AND POVERTY equity Fairness. Why do some people get more than others? What are the sources of inequality? Should the government change the distribution generated by the market?
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Income distribution in the US Suppose your heights was proportional to your income: Very poor would be about 3 inches tall. Average=5’7” 18’ tall: lawyers and doctors. 50-60’ tall: successful business people 1000-2000’ tall: CEOs. Bill Gates = approx. 8-9 miles tall. And that’s just income, wealth is worse. Using wealth as a measure, Gates would be 72 miles tall. At one point, Bill Gates had as much wealth as the poorest 40% of the US!
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THE DISTRIBUTION OF INCOME INCOME INEQUALITY IN THE UNITED STATES Distribution of Total Income and Components in the United States, 2000 (Percentages) HOUSEHOLDS TOTAL INCOME LABOR INCOME PROPERTY INCOME TRANSFER INCOME Bottom fifth 2.7 1.7 0.7 19.2 Second fifth 7.2 6.3 4.2 25.8 Third fifth 12.6 12.7 9.2 23.0 Fourth fifth 21.3 23.6 15.1 17.0 Top fifth 56.7 55.6 73.2 14.8 Top 1 percent 14.8 10.9 31.6 1.2 Source: Julie-Anne Cronin, US Department of the Treasury, OTA Paper 85, pg 19.
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THE DISTRIBUTION OF INCOME Changes in the Distribution of Income Distribution of Money Income of U.S. Families by Quintiles, 1947–2000 (Percentages) 1947 1960 1972 1980 1984 1994 1997 2000 Bottom fifth 5.0 4.8 5.4 5.2 4.7 4.2 4.2 4.2 Second fifth 11.8 12.2 11.9 11.5 11.0 10.0 9.9 9.7 Third fifth 17.0 17.8 17.5 17.5 17.0 15.7 15.7 15.5 Fourth fifth 23.1 24.0 23.9 24.3 24.4 23.3 23.0 23.0 Top fifth 43.0 41.3 41.4 41.5 42.9 46.9 47.2 47.6 Top 5% 17.2 15.9 15.9 15.3 16.0 20.1 20.7 20.8 Source: Statistical Abstract of the United States , various editions; Department of Commerce, HHES Division.
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Share of aggregate household income by quintile: 1970, 1980, 1990, and 2005
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Differences among African-American Households, White Households, and Single- Person Households Distribution of Money Income of Households, 2002 (Percentages) ALL HOUSEHOLDS AFRICAN- AMERICAN HOUSEHOLDS WHITE HOUSEHOLDS HISPANIC HOUSEHOLDS ONE-PERSON HOUSEHOLDS 0-15,000 16.1 27.4 14.5 19.1 36.3 15-25,000 13.2 16.4 12.8 17.2 19.8 25-35,000 12.3 14.5 12.0 15.7 13.7 35-50,000 15.1 14.8 15.2 16.4 13.4 50-75,000 18.3 13.9 18.9 16.9 9.7 75,-100,000 11.0 6.7 11.6 7.5 3.7 >100,000 14.1 6.4 15.0 7.2 3.5 Total 100.0 100.0 100.0 100.0 100.0 Note: Totals may not add to 100 due to rounding. Source:
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Lecture 31 - Announcements HW 17 due tomorrow. MT3 practice...

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