Summary
Summary ECO2003 Inequality part 1
- Course
- ECO2003 (ECO2003)
- Institution
- University Of Cape Town (UCT)
CO2003 Inequality part 1 summary
[Show more]
Content preview
INEQUALITY – UNIT 19Week 4 – TYPES, TRENDS AND INEQUALITY CHOICE
19.1 Inequality across the world and over
time
we can use Lorenz curves to estimate Gini coefficients, which
measure the degree of inequality in wealth, income, earnings
(income from work in the form of salaries and wages), years of
schooling, and other indicators of economic or social success.
Wealth, earnings, market income and disposable income
Figure 19.1 shows data on three dimensions of inequality (wealth,
earnings, and disposable income) in three economies.
Wealth is the value of the assets owned by a household (net of
their debts).
Earnings are income from labour, including from wages, salaries,
and self-employment.
Market income is the sum of:
all income received as earnings
all income received from business owned by the
household or from investments
Disposable income is the income that a family can spend
after paying taxes
, after receiving any monetary transfers from the
government such as unemployment benefit
and pensions
Two things stand out in Figure 19.1:
Wealth is much more unequally distributed than
earnings, and earnings are much more
unequally distributed than disposable income:
Though the differences among the three
measures of inequality are much smaller in
Japan than in Sweden and the US.
Sweden has much lower disposable income
inequality than the other two countries: This is
due to its relatively modest inequality in
earnings and more importantly, to its system
of taxes and transfers which benefits the less
well off. It is not due to greater equality in
Sweden’s distribution of wealth. As you can
see from the graph, wealth is distributed
almost as unequally in Sweden as in the US.
,Income inequalities over time and among countries
Another way to measure inequality focuses on the very rich,
providing an answer to the question: what fraction of total income
or wealth belongs to the richest 1% or 10% of the population?
This indicator has the advantage that it can be measured over
hundreds of years, because the very rich have long been required
to pay taxes, and hence we have reasonably good information on
their incomes and wealth.
Figure 19.2 shows the fraction of all wealth held by the richest
1%, for all countries on which long-run data is available.
, There appear to be three distinct periods:
- the eighteenth and nineteenth centuries up to about
1910 show increasing wealth inequality (excepting
Norway and Denmark)
- the twentieth century until 1980 shows decreasing
wealth inequality
- and the period since shows a modest increase in wealth
inequality.
Figure 19.3 presents similar data for the share of income before
taxes and transfers received by the top 1% of income earners.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller golightlysarah2. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R50,00. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
59325 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy summaries for 14 years now