Bài giảng MicroEconomics - Chapter 20 Income Inequality and Poverty

.Income Inequality and Poverty Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinFacts About Income InequalityAverage household income$66,424 in 2008 Among the highest in the worldDistribution by quintilesIncome mobilityPeople change quintilesGovernment redistributionTaxes and transfersLO120-2Facts About Income Inequality(1)Quintile(2)Percentage ofTotal IncomeLowest 20%Second 20%Third 20%Fourth 20%Highest 20%TotalDistribution by Quintiles, 20083.48.614.522.950.5100.0Source: Bureau of the Census, Limit$20,71239,00062,725100,240No LimitLO120-3Facts About Income InequalityLorenz Curve and Gini Ratio20406080100204060801000Perfect EqualityLorenz Curve(Actual Distribution)Complete InequalityABabcdefGini Ratio =Area AArea A + Area BPercentage of HouseholdsPercentage of IncomeLO120-4Facts About Income Inequality20406080100204060801000Lorenz CurveBefore Taxes andTransfersPercentage of HouseholdsPercentage of IncomeLorenz CurveAfter Taxes andTransfersImpact of government taxes and transfersLO120-5Causes of Income InequalityAbilityEducation and trainingDiscriminationPreferences and risksUnequal distribution of wealthMarket powerLuck, connections, and misfortuneLO220-6Income Inequality Over TimeRising income inequality since 1970Causes of growing inequalityGreater demand for highly skilled workersDemographic changesInternational trade, immigration, and decline in unionismLO320-7Equality Versus EfficiencyThe case for equality Maximizing total utilityThe case for inequalityIncentives and efficiencyThe equality-efficiency tradeoffLO420-8The 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 EfficiencyLO420-9The Economics of PovertyDefinition of poverty in 2008Single person < $10,201Family of 4 < $21,834Family of 6 < $28,76939.8 million AmericansPoverty rate 13.2%LO520-10Poverty TrendsPoverty rate trendsSignificant decline 1959-1969Stable in 11-13% range sinceRises with recession Measurement issuesArbitrary thresholdConsumption vs. incomeLO520-11Poverty Trends20-12The U.S. Income-Maintenance SystemEntitlement programsAll those eligible receive aidSocial insurance programsSocial security and MedicareUnemployment compensationPublic assistance programsWelfare LO620-13Public Assistance ProgramsSupplemental Security Income (SSI)Temporary Assistance for Needy Families (TANF)Supplemental Nutrition Assistance Program (SNAP)MedicaidEarned Income Tax CreditLO620-14DiscriminationInferior treatmentTaste-for-discrimination modelPrejudiced people receive disutilityWilling to pay to avoidDiscrimination coefficientPrejudice and the market African-American—White wage ratioCompetition and discriminationLO720-15Taste for Discrimination ModelAfrican-American Wage Rate(Dollars)African-American Employment (Millions)0D3D2D1S1216186$98MoreDiscriminationLessDiscriminationLO720-16DiscriminationStatistical discriminationJudged on average group characteristicsLabor market exampleProfitable, undesirable, but not maliciousLO720-17Occupational segregationThe crowding modelCrowd certain groups into less desirable occupationsEffects of crowdingElimination of crowdingLO7Discrimination20-18Occupational SegregationWage RateBBBMMW343464DxDyDzOccupation XOccupation YOccupation ZQuantity of Labor(Millions)Quantity of Labor(Millions)Quantity of Labor(Millions)Crowding women into one occupation (Z)results in men enjoying higher wages in the other occupations (X and Y).000LO720-19