1. Suppose that the wage distribution for Riverside is given below: Sector Number of Workers Wage $10 (per hour) $5 А 40 B 30 C 30 $5 a. Compute the level of wage inequality for the town using the 90th / 10th percentile ratio and the 90th / 50th and 50th /10th ratios. (Yes, the computation is simple. Don't over-think it.) b. Assume a minimum wage law is passed that doesn't affect the market in the high- wage sector A but boosts wages to $7/hour in sector B, the covered sector, while reducing employment to 20 in that sector. Displaced workers in sector B move into the uncovered sector, C, where wages fall to $4.50 per hour as employment grows to 40. Has wage inequality risen or fallen? Does your answer change depending on the measure of wage inequality you use?

1. Suppose that the wage distribution for Riverside is given below: Sector Number of Workers Wage $10 (per hour) $5 А 40 B 30 C 30 $5 a. Compute the level of wage inequality for the town using the 90th / 10th percentile ratio and the 90th / 50th and 50th /10th ratios. (Yes, the computation is simple. Don't over-think it.) b. Assume a minimum wage law is passed that doesn't affect the market in the high- wage sector A but boosts wages to $7/hour in sector B, the covered sector, while reducing employment to 20 in that sector. Displaced workers in sector B move into the uncovered sector, C, where wages fall to $4.50 per hour as employment grows to 40. Has wage inequality risen or fallen? Does your answer change depending on the measure of wage inequality you use?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter15: Poverty And Economic Inequality

Section: Chapter Questions

Problem 8SCQ: Using two demand and supply diagrams, one for the low-wage labor market and one for the high-wage...

See similar textbooks

Similar questions

Table 15.9 shows the share of income going to each quintile of the income distribution for the United Kingdom in 1979 and 1991. Use this data to calculate what the points on a Lorenz curve would be, and sketch the Lorenz curve. How did inequality in the United Kingdom shift over this time period? How can you see the patterns in the quintiles in the Lorenz curves?
Using two demand and supply diagrams, one for the low-wage labor market and one for the high-wage labor market, explain how a program that increased educational levels for a substantial number of low-skill workers could reduce inflame inequality.
Redistribution of income occurs through the federal income tax and government antipoverty programs. Explain whether or not this level of redistribution is appropriate and whether more redistribution should occur.
Will a free market tend to encourage or discourage discrimination? Explain briefly.
Which set of policies is more likely to cause a tradeoff between economic output and equality: policies of redistribution policies aimed at the ladder of opportunity? Explain how the production possibility frontier tradeoff between economic equality and output might look in each case.
Explain a situation using the supply and demand for skilled labor 111 which the increased number of college graduates leads to depressed wages. Given the rising cost of going to college, explain why a college education will or will not increase income inequality.
Cumulative percentage of income 90 80 70 60 50 40 30 20 10 O d 40 20 60 80 Cumulative percentage of population If the area of inequality (area between the line of perfect equality and the Lorenz Curve) equals 0.35 and the area beneath the line of perfect equality (given by OAB in the diagram) equals 0.7, calculate the Gini coefficient. A O AOS о в. 0,6 OC. It is impossible to calculate with the information provided. OD. 0,5 100
k The graph shows the Lorenz curve for income. Draw a point that shows the cumulative percentage of income earned by the poorest 40 percent of households. If income were distributed equally across all the households, the Lorenz curve would lie O A. along the y-axis OB. along the x-axis OC. above the line of equality D. along the line of equality % 5 ㄱ 6 Selected: none 3 ( & 7 8 100- 80- 60- 40- 20- 0- 9 Cumulative percentage of income Delete Clear ? 40 20 60 80 Cumulative percentage of households Line of equality >>> Draw only the objects specified in the question. O Next Income X 1 17 le S 10 Orie 1 C Cam NS. B Codi hool. Mihaile NS 21 ython ers [Tut Camp or +
QUESTION 5 The problem with the Poverty Line shown in Mankiw, Fig 2, is that: O It accounts mainly for in-kind transfers.. Bases poverty threshold mainly on money income. OIt excludes a large number of transfers. O It excludes earned income. learn-us east prod feet01-ythouleam.doudare blackboardedn.com/biackboardeamythosprod/Salled4744755/13505715X Blackboard Expiration 16202052. VMPG| VAPL, PA PL)
7 Create a thesis statement on racial inequality in a workplace.
Instructions: 1. Refer to the MCONNEL TEXTBOOK CHAPTER 23. DON'T USE ANY OTHER SOURCES Describe the distribution of income in the United States by personal income categories by households and quintile distribution by households. Explain how a Lorenz curve is used to describe income inequality. Define Gini ratio List seven causes of an unequal income distribution. State and evaluate the cases for and against income inequality. Define poverty as the Federal government does. Identify the rate of poverty in the U.S., and the incidence of poverty for various demographic groups, including African Americans, Hispanics, and female-headed households; identify some of the reasons for the poverty of each group. Define social insurance. Describe the major social insurance programs. What is a public assistance program? Describe the major public assistance (welfare) programs.
Summarize what has happened tothe incidence of poverty since 1960, anddetermine when and why the greatestprogress was made in reducing poverty (InCome Differences) List some reasons why householdincomes differ. Which factors are the mostimportant?