LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Question
Chapter 7, Problem 14P
a)
To determine
The Gini coefficient for the given economy.
b)
To determine
The effect of imposing a 30% tax on the wealthiest 2,000 individuals.
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A Gini coefficient of 0.15 would indicate that a society’s distribution of income is:
A.
PERFECTLY EQUAL
B.
RELATIVELY EQUAL
C.
MODERATELY UNEQUAL
D.
VERY UNEQUAL
E.
THE MOST UNEQUAL POSSIBLE
Which one of the following is the most likely to be associated with an increase in the incidence of poverty?
A) The Gini coefficient falls substantially.
B) The number of single persons with children and of single pensioners has increased substantially.
C) The real income of those in the top 20% of income earners falls by 10%.
D) The number of people earning below the level of income support has decreased.
No written by hand solution
Consider a 100-person economy, where half of the population receives 20% of the total income and the other half the remaining 80%. Using the Lorenz-curve approximation, what is the Gini coefficient in this economy (please use the comma to seprare decimals, such as: x,y)?
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