LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Question
Chapter 7, Problem 4P
a)
To determine
The relation between Gini coefficient and the state of poverty.
b)
To determine
The Gini coefficient associated with the given economy.
c)
To determine
The Gini coefficient when the poorest receives an income of $15,000.
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a. Is the presence of an underground economy likely to result in a Gini coefficient that overstates or understates poverty? b. Consider a simple economy where 90 percent of citizens report an annual income of $10,000 while the remaining 10 percent report an annual income of $110,000. What is the Gini coefficient associated with this economy? c. Suppose the poorest 90 percent of citizens actually have an income of $15,000 because each receives $5,000 of unreported income from the underground economy. What is the Gini coefficient now?
True or false: An increase in the share of income earned by the top half of the income distribution implies that the bottom half’s share and per capita income both decreased. (Be sure to address both “share” and “per capita income.”).
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.
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Similar questions
- An advantage of the Multidimensional Poverty Index (MPI) over the Human Poverty Index (HPI) is that: (a) It adds up separate deprivations for the whole country, then takes averages, and then combines them. (b) It provides the sum of the difference between the poverty line and actual income levels of all people living below that line. (c) It gives the proportion of a country’s population living below the poverty line. (d) It takes into account that there are negative interaction effects when people have multiple deprivationsarrow_forwardHow is absolute poverty measured, in comparison to the distribution of national income? Write down a statistic for each measurement. List 3 countries in Latin America with extremely high rates of absolute poverty and 3 countries with very high income inequality. What are 2 factors which may have increased absolute poverty rates throughout the region’s history? Finally, provide 2 factors which have increased income inequality in Latin America throughout its history.arrow_forwardSuppose that the Gini coefficient for Niger is 0.23 and the Gini coefficient for Canada is 0.34. From this, it is possible to conclude that these countries have…[Select one] different levels of absolute poverty. different Pigou-Dalton transfers. different levels of severe poverty. different Lorenz curves.arrow_forward
- Which of the following is an example of a positive economic statement? a.The government should not be involved in the income redistribution schemes. b.The after-tax distribution of income is more equal than the pre-tax distribution of income. c.The distribution of income in the United States should be more equal. d.The tax system should be more progressive so that the after-tax distribution of income can be more equal.arrow_forwardBy finding the ___________, Gini Coefficient is determined/calculated. a. difference between the richest and poorest of the population b. area between a Lorenz curve and the line of absolute equality c. percentage of the population living on more than $1 a day d. proportion of the population with more than a primary education e. percentage of the population living on less than $1 a dayarrow_forwardGiven the income distributions (1; 2; 2; 5; 5; 5; 7; 11; 11; 12; 20; 21; 22; 24); (2; 3; 3; 4; 4; 5; 7; 7; 11; 11; 12; 20; 21; 24); And a poverty line of z = 6, calculate the Sen poverty measure. Explain the values obtained for the two distributions.arrow_forward
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