Bài giảng MicroEconomics - Chapter 020 Income Inequality, Poverty, and Discrimination

Income Inequality, Poverty, and DiscriminationChapter 20McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.Chapter ObjectivesIncome inequality in the U.S. Sources of income inequalityIncome inequality since 1970Economic arguments regarding income inequalityPoverty measurement and incidenceThe U.S. income-maintenance programLabor market discrimination 20-2Facts About Income InequalityAverage household income$66,570 in 2006 Among highest in the worldDistribution by quintilesIncome mobilityPeople change quintilesGovernment redistributionTaxes and transfers20-3Facts About Income Inequality(1)Quintile(2)Percentage ofTotal IncomeLowest 20%Second 20%Third 20%Fourth 20%Highest 20%TotalDistribution by Quintiles, 20063.48.614.522.950.5100.0Source: Bureau of the Census(3)UpperIncome Limit$20,03537,77460,00097,032No Limit20-4Income InequalityLorenz Curve and Gini Ratio20406080100204060801000Perfect EqualityLorenz Curve(Actual Distribution)Complete InequalityABabcdefGini Ratio =Area AArea A + Area BPercentage of HouseholdsPercentage of Income20-5Government Redistribution20406080100204060801000Lorenz CurveBefore Taxes andTransfersPercentage of HouseholdsPercentage of IncomeLorenz CurveAfter Taxes andTransfersImpact of Government Taxes and Transfers20-6Causes of Income InequalityAbilityEducation and trainingDiscriminationPreferences and risksUnequal distribution of wealthMarket powerLuck, connections, and misfortune20-7Income Inequality Over TimeRising income inequality since 1970Causes of growing inequalityGreater demand for highly skilled workersDemographic changesInternational trade, immigration, and decline in unionism20-8Income InequalityColumbiaBrazilSouth AfricaGuatemalaMexicoUnited StatesItalyJapanSwedenGermany0 10 20 30 40 50Source: United Nations, Human Development Report, 2007/2008Percentage Total Income Received by Top One-Tenth of Receivers, Selected Nations 200720-9Equality Versus EfficiencyThe case for equality Maximizing total utilityThe case for inequalityIncentives and efficiencyThe equality-efficiency tradeoff20-10The Utility-Maximizing Distribution of IncomeAnderson’s MarginalUtility From IncomeBrooks’ MarginalUtility From Income00Marginal UtilityMarginal UtilityIncomeIncome$5000$5000$2500$7500MUBMUAaa’b’bUtility Gain(Entire Blue Area)Utility Loss(Entire Red Area)Equality Versus Efficiency20-11The Economics of PovertyDefinition of poverty 2006Single person < $9,800Family of 4 < $20,000Family of 6 < $26,80036.5 million AmericansPoverty rate 12.3%20-12Incidence of PovertyFemale HouseholdersAfrican AmericansHispanicsForeign-Born (Not Citizens)Children Under 18WomenTotal PopulationAsiansWhitesMenPersons 65 or OverMarried-Couple FamiliesFull-Time Workers0 10 20 30Poverty Rates Among Selected Population Groups, 2006Source: Bureau of the Census, www.census.gov20-13The Economics of PovertyPoverty rate trendsSignificant decline 1959-1969Stable in 11-13% range sinceRises with recession Measurement issuesArbitrary thresholdConsumption vs. income20-14Income-Maintenance SystemEntitlement programsAll those eligible receive aidSocial insurance programsSocial security and MedicareUnemployment compensationPublic assistance programsWelfare 20-15Public Assistance ProgramsSupplemental security incomeTemporary assistance for needy familiesFood stamp programMedicaidEarned Income Tax Credit20-16DiscriminationInferior treatmentTaste-for-discrimination modelPrejudice people receive disutilityWilling to pay to avoidDiscrimination coefficientPrejudice and the market African-American-White wage ratioCompetition and discrimination20-17Taste for Discrimination ModelAfrican-American Wage Rate(Dollars)African-American Employment (Millions)0D3D2D1S1216186$98MoreDiscriminationLessDiscrimination20-18DiscriminationStatistical discriminationJudged on average group characteristicsLabor market exampleProfitable, undesirable, but not malicious20-19DiscriminationOccupational segregationThe crowding modelCrowd certain groups into less desirable occupationsEffects of crowdingElimination of crowdingDiscrimination20-20Occupational SegregationWage RateBBBMMW343464DxDyDzOccupation XOccupation YOccupation ZQuantity of Labor(Millions)Quantity of Labor(Millions)Quantity of Labor(Millions)By crowding women into one occupation (Z)Men enjoy higher wages in the other occupations (X and Y)00020-21U.S. Family WealthMedian and Average Family Wealth, 1995-2004 In 2004 DollarsYearMedianAverage1995199820012004$70,80083,10091,70093,100$260,800327,500421,500448,200Family wealth rose rapidly between 1995 and 200420-22Family wealth became more unequal between 1995 and 2004Percentage of Total Family Wealth Held by Different Percentile Groups, 1995-2004199519982001200432.2%31.430.230.534.6%33.932.733.4YearBottom 90%Top 1%Bottom 10%Percentile of Wealth Distribution67.8%68.669.869.5U.S. Family Wealth20-23Key Termsincome inequalityLorenz curveGini ratioincome mobilitynoncash transfersequality-efficiency trade-offpoverty rateentitlement programssocial insurance programsSocial SecurityMedicareUnemployment compensationpublic assistance programsSupplemental Security Income (SSI)Temporary Assistance for Needy Families (TANF)food-stamp programMedicaidearned-income tax creditDiscrimination (EITC)taste for discrimination modeldiscrimination coefficientstatistical discriminationoccupational segregation 20-24Next Chapter PreviewThe Economicsof Health Care20-25