Chapter 20 - Poverty and the distribution of income. After completing this unit, you should be able to: Describe the distribution of income in the U.S. and the global distribution of income, explain various measures of income inequality, describe various measures of poverty,…
Trang 1Introduction to Economics: Social Issues and Economic Thinking
Wendy A Stock
PowerPoint Prepared by
Z Pan
Chapter 20
Poverty and the
Trang 2Ø Describe the distribution
of income in the U.S
and the global
Ø Describe some of the primary causes of poverty
Ø Describe the impacts of various poverty policies
Copyright © 2013 John Wiley & Sons, Inc. 2
After studying this chapter, you should be
able to:
Trang 3Ø In 2010, over 43 million of the 328 million people
in the United States were living in poverty, the
highest level of poverty in over a decade
Ø That same year, 12 of the 25 richest people in the world lived in the U.S
Ø The issue is more serious than we think
The issue of poverty
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& Sons, Inc.
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Perception vs reality and ideality
Trang 5Ø An Income Distribution shows the levels of
income in an economy and the percentage of individuals or households earning those income levels
Income Distribution
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& Sons, Inc.
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U.S Income Distribution
Trang 7U.S Income Distribution
Trang 8Ø Being in the top fifth of households, it takes an average of $171,000 per year in the United
States
Ø Being in the top 2 percent of households, it
takes $250,000 per year
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& Sons, Inc.
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WHAT IS being rich?
Trang 9Ø The share of total income earned by households
in the top quintile was 43 percent in 1969 and 50 percent in 2009
Ø Over the same period, the share of income
earned by the bottom quintile fell from 4 percent
to 3 percent
Ø The share of income earned by those in the
second quintile also fell, from 11 to 9 percent
The rich getting richer, the poor getting
poorer?
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& Sons, Inc.
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Global Income Distribution
Trang 11Ø Income Ratio compares the incomes of those in the upper end of an income distribution to the incomes of those in the lower end of the income distribution.
e.g 80:20 ratio
MEASURING INCOME INEQUALITY
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& Sons, Inc.
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U.S income ratios
Trang 13Ø Income Ratio compares the incomes of those in the upper end of an income distribution to the
incomes of those in the lower end of the income distribution
Ø Gini Coefficient measures income inequality on
a scale from 0 to 1, with higher values indicating more income inequality
MEASURING INCOME INEQUALITY
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International gini coefficients
Trang 15International gini coefficients
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World Inequality Over Time
Trang 17Ø Poverty Line (Poverty Threshold) is the income
or consumption level below which a person is
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& Sons, Inc.
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MEASURING POVERTY: U.S.
Trang 19MEASURING POVERTY: U.S.
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& Sons, Inc.
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MEASURING POVERTY: World
Trang 21Ø Absolute Poverty uses a measure of fixed
income or consumption level rather than an
underlying income distribution to set the poverty line
Ø Relative Poverty uses a measure of position in the income distribution to determine the poverty line
Relative versus Absolute Poverty
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& Sons, Inc.
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CAUSES OF POVERTY
Trang 23Ø Direct Payments:
Ø Food, Health, and Housing and Education
Programs: (Food stamps, WIC, Medicaid,
SCHIP, Head Start, Pell Grant)
Ø Tax Policy and Regulation (EITC)
POVERTY POLICY
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& Sons, Inc.
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1 What is the 80:20 ratio? What are the
implications for income inequality when the 80:20 ratio increases within a country?
2 How do poverty rates differ across
demographic and education groups in the Unites States? What are some possible sources of these differences?
Trang 25• Absolute measure of poverty
• Relative measure of poverty