ECON 139 set 8 (16 pages)

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ECON 139 set 8



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ECON 139 set 8

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Lecture number:
8
Pages:
16
Type:
Lecture Note
School:
University of California, San Diego
Course:
Econ 139 - Labor Economics
Edition:
1

Unformatted text preview:

ECON 139 SP 15 Antonovics 8 5 19 15 1 May 19th 2015 See what is happening at every point in earning distribution For both men and women large growth on top earnings Usegul for seeing the time frame of increased inequality between 1979 1981 inequality starts to skyrocket Page 1 of 16 If there is no inequality then it will be the blue straight line with points 0 2 0 2 0 4 0 4 etc The further away to the 45 degree slope line the Lorenz Curve is the more is the inequality The Gini Coefficient Gini Coeeficient Area of the shaded region 1 2 It s a comprehensive measure of inequality The Gini Coefficient 0 if there is no inequality The Gini Coefficient 1 if there is perfect inequality all of the income goes to the top quintile In the U S the Gini Coefficient is about 43 Page 2 of 16 Latest Numbers l In 2012 top 1 of households earned 19 3 of the total household income l In 2012 t op 10 of households earned 48 2 of the total household income l 95 of the income since 2009 have gone to gains go to the top 1 l In 2012 n top 1 is 393 000 n top 10 is 114 000 n Pre tax household income including realized capital gains Inequality There s one good thing about inequality is that it give people incentive to work harder We ve seen that inequality has been increasing in the U S How does the U S compare to other countries Has inequality increased because of increased mobility Has there been an increase in equality for other labor market outcomes besides wages Page 3 of 16 Is the Increase in Inequality Explained by an Increase in Earnings Mobility Earnings Mobility reflects the covariance of earnings across years If the covariance in income across years is low how much is my earnings over the years then earnings mobility is high Even if there has been an increase dispersion of annual earnings it doesn t mean that there has been an increase in the dispersion of lifetime income maybe people s incomes are just bouncing around more from year to year Thus is increased inequality in the United



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