ECONOMICS: Principles and Applications 3e HALL & LIEBERMAN © 2005 Thomson Business and Professional Publishing Economic Inequality

Table 1 Hourly Earnings of Full-time Workers in Selected Occupations, 2001

Figure 1 Disappearing Wage Differentials LDLD 20 A' A $25 LDLD $30 B' B 25 Number of Elementary School Teachers Hourly Wage Number of Computer Systems Analysts Hourly Wage (a)(b)

Figure 2 The Market for Physicians Number of Physicians Physicians' Salaries W1W1 W2W2 W3W3 C B A 3.Other policies to increase demand for physicians move the market here, at final wage rate W 3. 1.Without AMA activities to increase salaries, equilibrium is here, at wage rate W 1. 2.AMA restrictions on the supply of physicians move the market here.

Figure 3 Union Wage Differentials W1W1 W2W2 LDLD (a) A' A 300,000 Number of Long-haul Truckers Wage 250, ,000 1.With no labor union, both long- and short-haul truckers earn the same wage rate, W 1. 2.A union wage of for long-haul truckers of W 2 creates an excess supply of workers. LSLS

Figure 3 Union Wage DifferentialsFigure 3b: Union Wage Differentials W3W3 W1W1 B' B LDLD 200, ,000 3.Unemployed long-haul truckers move to the nonunion short-haul market, and the labor supply curve shifts rightward... 4.pushing the short-haul wage rate down to W 3. (b) Number of Short- haul Truckers Wage

Figure 4 The Minimum Wage LDLD 3.00 $4.00 LDLD 4.00 $5.15 LSLS N2N2 N1N1 N3N3 A' A B' B A minimum wage raises pay, but decreases jobs in the covered sector. Hourly Wage (b) Unskilled Labor Not Covered by Law Number of Workers Hourly Wage (a) Unskilled Labor Covered by Law Number of Workers Some who can't find work go to the uncovered sector, lowering wages there.

Figure 4 The Minimum Wage LSLS $24.00 (c) Skilled Labor Number of Workers Hourly Wage C' C As capital is substituted for unskilled labor, demand for skilled workers goes up, raising the skilled wage rate.

Figure 5 Employer Discrimination and Wage Rates W1W1 W3W3 LDLD W2W2 W1W1 Number of Workers Wage Sector A (Discriminating) Number of Workers Wage Sector B (Nondiscriminating) LDLD E E' F F'

Table 2 Median Weekly Earnings, 2001 (of Full-time Wage and Salary Workers Over Age 25)

Figure 6 The Vicious Cycle of Discrimination Current Job Discrimination Lower Wage Lower Human Capital Investment Unemployment Lower Skill Level Less Job Experience Pre-market Discrimination

Table 3 Poverty Rates for U.S. Individuals

Table 4 Percent of Total Household Income Earned by Each Fifth and Top 5 Percent of U.S. Households

Figure 7 The U.S. Lorenz Curve, 2001 Line of Complete Equality Lorenz Curve B The Lorenz curve shows the percentage of income earned by different percentages of the population. This point shows the bottom 40 percent of the population earned 12.2 percent of total income in A Percentage of Households Percentage of Total Income

Table 5 Percent of Total Household Net Worth Owned by Fractions of U.S. Households

Figure 8 U.S. Lorenz Curves for Income and Wealth, 2001

Table 6 Income Mobility Between 1988 and 1998

Table 7 Corporations with Highest- Paid CEOs in 2002

Figure A.1 The Minimum Wage in a Monopsony Labor Market LSLS E $4 MRP MFC F $6 $4 LSLS E MRP MFC F G The wage rate, $4, is on the labor supply curve. The minimum wage can raise wages and employment under monopsony and the monopsony firm increases employment to 125 workers. Dollars (a)(b) Number of Workers With no minimum wage, monopsony employment is at MRP = MFC. With a minimum wage of $6, the MFC curve is horizontal up to G…