Earnings / Discrimination / Income / Inequality / Poverty Ch. 19 and 20 in Text Supplemented with “5 Steps to A 5”

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Presentation transcript:

Earnings / Discrimination / Income / Inequality / Poverty Ch. 19 and 20 in Text Supplemented with “5 Steps to A 5”

Ch 19 Read pg 417 through “The Superstar Phenomenon” (ends on 426) Pg 426 “The Economics of Discrimination” through the end of the chapter.

Ch 20 Read introduction “The Poverty Rate” through “Problems in Measuring Inequality” (ends on top of 444) 446 “The Political Philosophy of Redistributing Income” through the end of the chapter

5 Steps to a 5 Reading selection on F.I.S. Pg

Ch 19 Earnings and Discrimination Labor – Abide by same laws of Supply and Demand Who Supplies Labor? Who Demands Labor? At W* - each worker is paid the value of their marginal contribution to the economy’s production of goods and services

So why do we have such variations in earnings? Must analyze S + D for different types of labor A.Compensating Differentials: i.Non- monetary characteristics easy/hard, safe/dangerour, fun/boring ii. Which would you rather do? Supply of labor for easy /safe / fun jobs

The rest of this power point comes from “5 Steps to a 5”

Distribution of Income

LORENZ CURVE - Hypothetical line of perfect equality – the farther the Lorenz Curve Lies below the line of perfect equality, the more UNEQUAL the distribution of income. The distance between perfect equality and the Lorenz Curve is calculated by the “GINI RATIO (COEFFICIENT)” A / (A+B) : the closer it is to “ 0 “, the more equal the distribution the closer it is to “ 1 “, the more unequal the distribution

What do you think are the sources of income inequality?

Can Income be “REDISTRIBUTED”?

TAXES There are three main types of taxes related to income Proportional Regressive Progressive

Proportional Regressive Progressive ???????

Which one is most fair? Equity is in the eye of the beholder

Married filing jointly 10% on $18,150 15% on $55,550 = $8, $75,050 x 25% =$18, If you make $148,850 and pay $28,925 in Taxes = 19% of total income If you make $457,600 and pay $127,962 in taxes = 28%

2014 Tax Brackets: filing single