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Chapter 30: Q.16 (page 691)

During the past decade, many members of the baby boom generation have passed through ages ranging from the middle 40s to the late 50s. Do you suppose that the fact that there have been more members of this generation than other generations in the population during this past decade tends to imply that there was higher or lower measured inequality over the period? Why?

Short Answer

Expert verified

The population during this past decade tends to imply that there was lower measured inequality over the period

Step by step solution

01

Given Information

Lorenz bend is the realistic technique for concentrating on scattering. Showing the degree of takeoff scattering between equivalent circulation and genuine appropriation of a variable is utilized.

02

Explanation

More individuals in the age mid-40s to late50s were in the populace somewhat recently. They were in their pinnacle procuring period. So there was less inequality as a higher total level of income was in the hand of a higher combined level of the populace. In this way, the Lorenz bend was nearer to the line of fairness.

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Most popular questions from this chapter

Some economists have argued that if the government wishes to subsidize health care, it should instead provide predetermined amounts of payments (based on the type of health care problems experienced) directly to patients, who then would be free to choose their health care providers. Whether or not you agree, can you give an economic rationale for this approach to governmental health care funding?

Why do you suppose that observers have proposed redesigning income maintenance programs to provide a "marriage premium" via extra benefits if adults with children marry?

Why do you suppose that choosing other increments besides \(15,000 or \)30,000 can yield even more distributional variations of households within these seven income groupings?

(Hint: what do you think could happen if one were to broaden the income increments to \(100,000 or narrow them to \)5,000 while holding the number of income groups equal to seven?)

Suppose that a nation has implemented a system for applying a tax rate of 2 per cent to the incomes earned by the 10 per cent of its residents with the highest incomes. All funds collected are then transferred directly to the 10 per cent of the nation's residents with the lowest incomes. What is the general effect on the shape of a Lorenz curve based on incomes after collection and redistribution of the tax?

Estimates indicate that in recent years, the poorest 40 percent of the population earned about 15 percent of total income in Argentina. In Brazil, the poorest 40 percent earned about 10 percent of total income. The next-highest 30 percent of income earners in Argentina received roughly 25 percent of total income. In Brazil, the next-highest 30 percent of income earners received approximately 20 percent of total income. Can you determine, without drawing a diagram (though you can if you wish), which country's Lorenz curve was bowed out farther to the right?
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