 Income varies widely throughout Canada and the United States, many find it to be inequality, while others say that if you work hard, you deserve a spot at the top  The Distribution of Income

 A lot of the time, income distribution is given in table  Lorenz Curve:  A graph showing the cumulative distribution of income among a country’s households  Interpret the Lorenz Curve by comparing it with 2 hypothetical economies with extreme income distributions:  Perfectly Equal  Perfectly Unequal The Lorenz Curve

 Each household earns an identical amount  Line of Equality is a straight, 45 0 line  The more “bowed-out” the Lorenz Curve is, the more uneven the income distribution Perfect Equality

 One house earning all economy’s income  All other households receiving nothing  This hypothetical Lorenz curve would follow the horizontal and vertical axes of the graph Perfect Inequality

 When Lorenz curves are in between extremes, Gini Coefficient provides a numerical measure of income distribution  Gini Coefficient:  The area between a Lorenz Curve and the 45-degree line of perfect equality divided by the entire triangular area under this same 45- degree line  Gini Coefficient = 0 : Perfect Equality  Gini Coefficient = 1 : Perfect Inequality Between the Extremes

 Seven main determinants of wage levels in labour markets:  Labour Productivity  Education  Experience  Job Conditions  Regional Disparities  Market Power  Discrimination Reasons for Income Inequality: Wages

Education and Average Income

 Seniority Rights:  The workplace privileges (higher wages, first for promotions, overtime work) provided to workers who have the longest experience with their employer Age and Average Income

 Not all income inequalities are due to wages  Profit, rent and interest also play a part  3 main factors that determine other types of income:  Risk-Taking  Unstable work; Entrepreneurs  Ability  Star athlete; Computer Programmer  Wealth  Rich gets richer Reasons for Income Inequality: Other Incomes