1. Inequalities of Development Lorenz Curve

2. Measurements of Income Distribution
Lorenz Curve:
A curve showing the proportion of national income earned by a given percentage of the population.
e.g what proportion of national income is earned by the top 10% of the population?

3. Lorenz Curve
% of National Income
This line represents the situation if income was distributed equally. The poorest 10% would earn 10% of national income, the poorest 30% would earn 30% of national income.
30%
10%
10%
30%
Percentage of Population

4. Lorenz Curve
% of National Income
In this second example, the Lorenz curve lies further below the line of equality. Now, the poorest 30% only earn 7% of the national income.
The Lorenz Curve will show the extent to which equality exists. The greater the gap between the line of equality and the curve the greater the degree of inequality.
In this example, the poorest 30% of the population earn 20% of the national income.
20% 7%
30%
Percentage of Population

5. The Lorenz Curve
The Lorenz curve represents the distribution of income; it expresses the relationship between cumulative percentage of households and cumulative percentage of income.

6. Lorenz Curve for the United States, 1998

7. World distribution of wealth (PPP) Lorenz Curve
100 90 80 70 60 50 40 30 20 10
Pop’
Wealth
(PPP)
1988
1993 10
0.9
0.8 20
2.3 2 50
9.6
8.5 75
25.9
22.3 85 41
37.1 90
53.1
49.2 95
69.8
66.3 99
91.7
91.5
100
Line of total integration
Cumulative Wealth (PPP) 10 20 30 40 50 60 70 80 90
100
Cumulative Global Population

8. World distribution of wealth Lorenz Curve
100 90 80 70 60 50 40 30 20 10
Pop’
Wealth
(PPP)
1988
1993 10
0.9
0.8 20
2.3 2 50
9.6
8.5 75
25.9
22.3 85 41
37.1 90
53.1
49.2 95
69.8
66.3 99
91.7
91.5
100
The richest 10% possessed 46.9% of the world wealth in 1988.
Line of total integration
Cumulative Wealth (PPP) 10 20 30 40 50 60 70 80 90
100
Cumulative Global Population

9. World distribution of wealth Lorenz Curve
100 90 80 70 60 50 40 30 20 10
Pop’
Wealth
(PPP)
1988
1993 10
0.9
0.8 20
2.3 2 50
9.6
8.5 75
25.9
22.3 85 41
37.1 90
53.1
49.2 95
69.8
66.3 99
91.7
91.5
100
The richest 10% possessed 50.8% of the world wealth in 1993.
Line of total integration
Cumulative Wealth (PPP) 10 20 30 40 50 60 70 80 90
100
Cumulative Global Population

10. World distribution of wealth (PPP) Lorenz Curve
100 90 80 70 60 50 40 30 20 10
Pop’
Wealth
(PPP)
1988
1993 10
0.9
0.8 20
2.3 2 50
9.6
8.5 75
25.9
22.3 85 41
37.1 90
53.1
49.2 95
69.8
66.3 99
91.7
91.5
100
Line of total integration
Cumulative Wealth (PPP)
The greater this area the more unequal the distribution 10 20 30 40 50 60 70 80 90
100
Cumulative Global Population