Lorenz curves of Country U and Country C and the difference in their income distribution in 2009.

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Chapter 19, Problem 4SPA

To determine

Lorenz curves of Country U and Country C and the difference in their income distribution in 2009.

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2. Constructing a Lorenz curve from income shares data The following table shows the approximate income distribution for Peru, Bulgaria, and Lithuania in 2016. In particular, it shows the income shares of each fifth of the income distribution. Percentage Share, 2016 Percentage of Families Peru Bulgaria Lithuania Lowest fifth 4 9 7 Second-lowest fifth 8 14 12 Middle fifth 12 17 16 Second-highest fifth Highest fifth 20 22 22 56 38 43 has the most total income. On the following graph, plot the Lorenz curves for the three countries. Plot Peru's Lorenz curve using the green points (triangle symbol), Bulgaria's Lorenz curve using the blue points (circle symbol), and Lithuania's Lorenz curve using the purple points (diamond symbol). Be sure to plot the first point of each Lorenz curve at (0,0). Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. CUMULATIVE PERCENTAGE OF MONEY INCOME graph.) 100 20 40 60 80 100…

2. Constructing a Lorenz curve from income shares data The following table shows the approximate income distribution for Haiti, Croatia, and Nicaragua in 2013. In particular, it shows the income shares of each quintile of the income distribution. Percentage of Total Income, 2013 Haiti Croatia 2 8 6 13 10 17 22 40 Income Group Lowest quintile Second quintile Third quintile Fourth quintile 18 Highest quintile 64 Nicaragua 6 10 14 21 49 has the least total income.

Instructions: Use the interactive tool to plot Lorenz curves for the information in the table. Quintile 1st % of Income, United States, 5 2010 % of Income, Bangladesh, 2010 9 2nd 10 13 3rd 14 16 United States data from Census.gov, before-tax income, rounded to 1/100ths. Data for Bangladesh from WorldBank.org, rounded to 1/100ths. 4th 20 21 5th 51 41 Report your answers to two decimal places. According to these data, the Gini coefficient for the United States in 2010 is The Gini coefficient for Bangladesh in 2010 is These data indicate that in 2010, income inequality is (Click to select) in the United States compared to Bangladesh.