Inequality. Household income thresholds for selected percentiles (U.S. 2013) 10 th percentile? 20 th percentile? 50 th percentile? 80 th percentile? 90.

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Presentation transcript:

Inequality

Household income thresholds for selected percentiles (U.S. 2013) 10 th percentile? 20 th percentile? 50 th percentile? 80 th percentile? 90 th percentile? 95 th percentile? 99 th percentile? So what does this suggest income distribution looks like?

Inequality

Measuring Inequality Using Lorenz Curve Suppose we divided population into 5 income quintiles, where everyone in a higher quintile earns at least as much as highest earner in lower quintile. Then, we graph the cumulative share of income on the cumulative share of households. Suppose there was perfect income equality, what would Lorenz curve look like? What would Lorenz Curve look like for this distribution? So how does Lorenz Curve change as inequality increases?

Inequality Measuring Inequality (cont.) What is the Gini Coefficient? What are 90-10, 50-10, wage gaps?

Inequality Measuring Inequality (cont.) U.S. year round full- time workers only

Inequality International Comparisons

Inequality Measuring Inequality (cont.) What does Saez article “Striking it Richer….” describe?

Inequality Measuring Inequality (cont.)

Inequality Measuring Inequality (cont.)

Inequality Measuring Inequality (cont.)

Inequality Measuring Inequality (cont.)

Inequality

Why did Inequality increase?

Inequality Why did skill premium increase? Can this be the whole story?

Inequality Should we care about inequality? David Simon “There are now two Americas. My country is a horror show” Inequality and mobility?

Inequality What should we do about inequality?