Income inequality

Question 1

Disposable income (INSEE) :

Answer 1

Include : family and children

• Activity and non activity income : unemployment, pension, benefit , wage or property benefit
• Capital income : the insurance product, saving account
• Transfert : allocations familiales

Question 2

Standard of living :

Answer 2

Disposable income divided by the number of consumption unit in the households

Question 3

Income inequality :

Answer 3

Income inequality measures how much incomes are distributed unequally in the economy.

Question 4

CDF :

Answer 4

The Cumulative Distribution Function : another tool to represent income distribution : uses the vertical axis to adds fraction of the population, and the horizontal shows income corresponding

Question 5

Sxx number :

Answer 5

give the information follows : if we add all the disposable income of an economy, the fraction which would be held by the poorest xx percent will be gives by Sxx

Sxx = sum of the income of xx porrest households /
sum of the everybody income

Question 6

Gini coefficient or index

Answer 6

The Gini coefficient, developed in 1912 by statistician Corrado Gini, gives an index of the inequality in an economy by computing the statistical dispersion of the shares of income held by the population. An economy with a Gini index of 0 would be perfectly equal while one with an index of 1 would be perfectly unequal.

Question 7

Lorenz curve :

Answer 7

The Lorenz curve (for income) represents the cumulative share of the total income (vertical axis)
held by the (ordered by income) cumulative (bottom) share of the population (horizontal axis).

Question 8

The Gini index is computed from the Lorenz curve

It is defined as:

Answer 8

Total area between 45 deg. line and Lorenz curve /

Total area below the 45 deg. line = A / A + B = A/0,5 = 2A = 2(0,5 - B) = 1 - 2B