Flashcards on Labor Economics: Human Capital and Inequality
Labor Economics: Human Capital, Inequality & Wages Explained
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Income inequality
7 cards
Card 1
Question: What does the Gini coefficient measure?
Answer: The degree of inequality in an income distribution.
Card 2
Question: What does the skill‑biased technological change explanation say about rising inequality?
Answer: Technological advances have complemented the productivity of skilled labor relative to unskilled labor, increasing inequality.
Card 3
Question: What does an actual Lorenz curve show?
Answer: The cumulative share of income earned by quintiles (or percentiles) of households.
Card 4
Question: What is the Gini coefficient for a perfectly unequal society and for a perfectly equal society?
Answer: Perfectly unequal: 1; Perfectly equal: 0.
Card 5
Question: Which statement about the Gini coefficient is NOT true: it reflects the Lorenz curve, equals zero at perfect equality, increases with inequality, must
Answer: The false statement is that it must fall when the amount of income in an economy increases. (Total income can rise without changing inequality.)
Card 6
Question: If every household's income increases by the same dollar amount, how does the Gini coefficient change?
Answer: The Gini coefficient stays the same because all households received the same increase in income.
Card 7
Question: Given a grouped income distribution with cumulative shares by 20th, 40th, 60th, 80th, 100th percentiles of 0.05, 0.15, 0.35, 0.60, 1.00 respectively,
Answer: Approximately 0.23.