<< Chapter < Page Chapter >> Page >

In this Chapter, we seek to understand why and how income distribution is changing and to identify those types of government policies which can and cannot help rectify income inequality over time.

We will see, in this and in many following chapters, that many policies used in the past that were ostensibly intended to improve income distribution have either had little effect or have, on occasion, actually worsened this problem. One policy, however, appears to have been successful virtually everywhere. In this and subsequent Chapters, we will examine the most potent policy for rectifying economic inequality: expansion in investment in human capital, especially education and public health. Some important implications of investment in human capital are covered in this Chapter; a fuller discussion is presented in Chapter 5.

Concepts for understanding income distribution issues: the gini coefficient

The gini coefficient

Traditionally, the best measure of income inequality or equality has been the Gini Coefficient: Also known as the Gini Index. The Gini ratio is a measure of statistical dispersion developed by the Italian statistician and sociologist Corrado Gini and published in his 1912 paper “Variability and Mutability.”

Gini= 0 Perfect Equality (everyone earns the same).
Gini= 1 Extreme Inequality (one person gets all the income).

Recent experience: 1980s-2008

1980 2008
U.S. Gini 0.34 0.38 By one measure, some increase in inequality, continuing through 2013, to 0.44. (However, see estimates cited later in Chapter).
Germany Gini 0.26 0.30 Increase in inequality from a lower base.
China Gini 0.28 0.40 Large increase.
China Gini 0.58 0.55 Some decrease in inequality.

In 2000, Brazil had the most unequally distributed income in the world. But by 2008, income inequality there had lessened, partly because of Brazil’s ambitious program of conditional cash transfers, involving direct payments to low income families with children in school. This program is discussed extensively in Chapter___. [MG: NEED SOURCE]

Alt text needed

The World Gini 1985 began rising in 1992, and then began a slight decline after 2000. Figure 4-1 displays the evolution of world inequality (or equality) from 1960 to 2012, as measured by the Gini coefficient. The graph shows more or less constant worldwide Gini coefficients after 1963 and until 1983. Then, income inequality began to increase. By 2000, the worldwide Gini reached a maximum of about 0.54, after which it began to slowly decline. What we observe in Figure 4-1 is entirely consistent with what we will find in the remainder of this Chapter and this book.

Efforts to understand the many complexities of income distribution issues in emerged nations may be enhanced by considering possible cause and consequences of rising inequality in the wealthy nations of Europe and North America for four reasons.

First trends in income distribution in developed nations, may, in a globalizing world, presage what might soon occur in emerging nations. Second, the study of income distribution issues anywhere involves difficult empirical and methodological questions. If improperly handled, resolution of these questions can lead to unwarranted conclusions. Third, the literature on income distribution in developed nations is substantial, with important lessons for the interpretation of income distribution studies in emerging nations. Finally, recent research on income distribution shows that the observed distribution of income anywhere is greatly affected by how income is measured (pre-tax vs. post-tax, pre-transfer vs. post-transfer) can materially affect conclusions about income distribution trends.

Questions & Answers

what is the stm
Brian Reply
is there industrial application of fullrenes. What is the method to prepare fullrene on large scale.?
industrial application...? mmm I think on the medical side as drug carrier, but you should go deeper on your research, I may be wrong
How we are making nano material?
what is a peer
What is meant by 'nano scale'?
What is STMs full form?
scanning tunneling microscope
how nano science is used for hydrophobicity
Do u think that Graphene and Fullrene fiber can be used to make Air Plane body structure the lightest and strongest. Rafiq
what is differents between GO and RGO?
what is simplest way to understand the applications of nano robots used to detect the cancer affected cell of human body.? How this robot is carried to required site of body cell.? what will be the carrier material and how can be detected that correct delivery of drug is done Rafiq
what is Nano technology ?
Bob Reply
write examples of Nano molecule?
The nanotechnology is as new science, to scale nanometric
nanotechnology is the study, desing, synthesis, manipulation and application of materials and functional systems through control of matter at nanoscale
Is there any normative that regulates the use of silver nanoparticles?
Damian Reply
what king of growth are you checking .?
What fields keep nano created devices from performing or assimulating ? Magnetic fields ? Are do they assimilate ?
Stoney Reply
why we need to study biomolecules, molecular biology in nanotechnology?
Adin Reply
yes I'm doing my masters in nanotechnology, we are being studying all these domains as well..
what school?
biomolecules are e building blocks of every organics and inorganic materials.
anyone know any internet site where one can find nanotechnology papers?
Damian Reply
sciencedirect big data base
Introduction about quantum dots in nanotechnology
Praveena Reply
what does nano mean?
Anassong Reply
nano basically means 10^(-9). nanometer is a unit to measure length.
do you think it's worthwhile in the long term to study the effects and possibilities of nanotechnology on viral treatment?
Damian Reply
absolutely yes
how to know photocatalytic properties of tio2 nanoparticles...what to do now
Akash Reply
it is a goid question and i want to know the answer as well
characteristics of micro business
for teaching engĺish at school how nano technology help us
How can I make nanorobot?
Do somebody tell me a best nano engineering book for beginners?
s. Reply
there is no specific books for beginners but there is book called principle of nanotechnology
how can I make nanorobot?
what is fullerene does it is used to make bukky balls
Devang Reply
are you nano engineer ?
fullerene is a bucky ball aka Carbon 60 molecule. It was name by the architect Fuller. He design the geodesic dome. it resembles a soccer ball.
what is the actual application of fullerenes nowadays?
That is a great question Damian. best way to answer that question is to Google it. there are hundreds of applications for buck minister fullerenes, from medical to aerospace. you can also find plenty of research papers that will give you great detail on the potential applications of fullerenes.
how did you get the value of 2000N.What calculations are needed to arrive at it
Smarajit Reply
Privacy Information Security Software Version 1.1a
Got questions? Join the online conversation and get instant answers!
Jobilize.com Reply

Get the best Algebra and trigonometry course in your pocket!

Source:  OpenStax, Economic development for the 21st century. OpenStax CNX. Jun 05, 2015 Download for free at http://legacy.cnx.org/content/col11747/1.12
Google Play and the Google Play logo are trademarks of Google Inc.

Notification Switch

Would you like to follow the 'Economic development for the 21st century' conversation and receive update notifications?