微观经济学2014级版1820章ch18

EconomicInequalityCHAPTER18AfterstudyingthischapteryouwillbeabletoDescribetheinequalityineandwealthintheUnitedStatesandthetrendsininequalityExplainthefeaturesofthelabormarketthatcontributetoeconomicinequalityDescribethescaleoferedistributionbygovernmentRagsandRichesHomelessnessandabjectpovertyexistsalongsideextremewealth.Whatdeterminesthedistributionofeconomicwell-being?Howmuchredistributiondoesgovernmentdotolimitextremepoverty?MeasuringEconomicInequalityThecensusbureaudefinesahousehold’seasmoneye,whichequalsmarketepluscashpaymentstohouseholdsbythegovernment.Marketeequalswages,interest,rent,andprofitearnedbythehouseholdinfactormarkets,beforepayingetaxes.MeasuringEconomicInequalityQuintileerangeNumberinClassPercentageinClassLowestLessthan$19,000Second$19,001to$36,000Third$36,001to$57,000Fourth$57,001to$92,000FifthGreaterthan$92,000Total100MeasuringEconomicInequalityTheDistributionofeFigure18.1showsthedistributionofeacrossthe113millionhouseholdsintheUnitedStatesin2005.MeasuringEconomicInequalityThemodeeisthemostcommoneandwasabout$13,000.Themedianeisthelevelofethatseparatesthepopulationintotwogroupsofequalsizeandwas$46,326.Themeaneistheaverageeandwas$63,344.MeasuringEconomicInequalityAdistributioninwhichthemeanexceedsthemedianandthemedianexceedsthemodeispositivelyskewed,whichmeansithasalongtailofhighvalues.ThedistributionofeintheUnitedStatesispositivelyskewed.MeasuringEconomicInequalityFigure18.2showsthedistributionofesharesfortheUnitedStatesin2005.MeasuringEconomicInequalityIn2005:Thepoorest20%ofhouseholdsreceivedonly3.4%ofthetotale.Themiddle20%received14.6%oftotale.Therichest20%received50.4%oftotale.MeasuringEconomicInequalityTheeLorenzCurveTheeLorenzcurvegraphsthecumulativepercentageofeearnedagainstthecumulativepercentageofhouseholds.Figure18.3showstheeLorenzcurvefortheesharesinFigure18.2.MeasuringEconomicInequalityTheverticalaxisofaLorenzcurveisthecumulativepercentageoftotale.Thehorizontalaxisisthecumulativepercentageofhouseholds.MeasuringEconomicInequalityIfeveryonehasthesamee,theeLorenzcurveisa45degreelinefromthelowerleftcornertotheupperrightcorner.Thislineiscalledthelineofequality.TheLorenzcurveshowsthecumulativedistributionofe.MeasuringEconomicInequalityTheDistributionofWealthAhousehold’swealthisthevalueofallthethingsthatitownsatapointintime.Thedistributionofwealthisanotherwayofexaminingthedegreeofeconomicinequality.MeasuringEconomicInequalityAwealthLorenzcurvemeasuresthedistributionofwealthinthesamewayaneLorenzcurvemeasuresthedistributionofe.Thedistributionofwealthisevenmoreunequallydistributedthane.MeasuringEconomicInequalityWealthVersuseWealthisastockofassetsandeisaflowofearningsthatresultfromagivenstockofwealth.Thereasonthatwealthismoreunequallydistributedthaneisthatwealthdoesnotmeasurethequantityofhumancapital—onlyereflectsthequantityofhumancapital.Becausewealthdoesnotreflectpotentialforefromhumancapital,eisamoreaccuratemeasureofeconomicinequality.MeasuringEconomicInequalityAnnualorLifetimeeandWealth?Ahousehold’seandwealthchangeovertime.Ahouseholdheadedbyayoungpersonstartsoutwithmoderateeandaccumulateswealthforretirementyears.Amiddle-ageheadedhouseholdisinitshighestearningyearsandenjoysthehighestlevelofwealth.Ahouseholdsheadedbyanolder,retiredpersonhaslowerearningandisconsuming,ratherthanaccumulating,itswealth.MeasuringEconomicInequalityTrendsinInequalityTomeasureinequalityasanindexnumber,weusetheGiniratio,whichequalstheratioofblueareatotheredareainthetwofiguresbelow.MeasuringEconomicInequalityWithperfectequality,theLorenzcurveisthelineofequalityandtheGiniratioiszero.MeasuringEconomicInequalityWiththemostextremeinequality—onepersonhasallthee—theLorenzcurverunsalongtheaxesandtheGiniratioisone.MeasuringEconomicInequalityTheclosertheGiniratioistoone,themoreunequalisthedistributionofe.In2005,theU.S.Giniratiowas0.47.MeasuringEconomicInequalityFigure18.5showstheU.S.Giniratiofrom1970to2005.TheGiniratioshowsthatthedistributionofeintheUnitedStateshasemoreunequal.Despitethechangeinthedefinitionin1992,thetrendisstillvisible.MeasuringEconomicInequalityWhoAretheRichandthePoor?Figure18.6onthenextslideidentifiesthefivecharacteristicsthatappeartoinfluencetheamountofeearnedbyahousehold.ThesecharacteristicsareEducationTypeofhouseholdAgeofhouseholderRaceMeasuringEconomicInequalityMeasuringEconomicInequalityPovertyPovertyisasituationinwhichahousehold’seistoolowtobeabletobuythequantitiesoffood,shelter,andclothingthataredeemednecessary.Povertyisarelativeconcept.In2005,thepovertylevelcalculatedbytheSocialSecurityAdministrationforafour-personfamilywas$19,971.37millionAmericanslivedinhouseholdswithesbelowthispovertylevel—12.6percentofthetotalpopulationin2005.MeasuringEconomicInequalityThedistributionofpovertybyraceisunequal:In2005,8.5percentofwhiteAmericanslivedinpovertycomparedto22percentofHispanic-originAmericansand25percentofAfricanAmericans.Povertyisalsoinfluencebyhouseholdstatus:Morethan31percentofhouseholdsinwhichthehouseholderisafemalewithnohusbandpresenthadesbelowthepovertylevel.TheSourcesofEconomicInequalityInequalityarisesfromunequallabormarketesandfromunequalownershipofcapital.Twosignificantfeaturesoflabormarketscreateedifferencesamongindividuals:HumancapitaldifferencesDiscriminationTheSourcesofEconomicInequalityHumanCapitalThemorehumancapitalapersonpossesses,themoreethatpersonlikelyearns,otherthingsremainingthesame.Onthedemandsideofthelabormarket,high-skilledworkersgeneratealargermarginalrevenueproductthanlow-skilledworkers.Sofirmsarewillingtopayahigherwagerateforhigh-skilledlabor.TheSourcesofEconomicInequalityFigure18.7(a)showsthedifferenceindemandcurvesforhigh-skilledversuslow-skilledlabor.TheSourcesofEconomicInequalityOnthesupplysideofthelabormarket,high-skilledworkersincuracostofacquiringtheirskills—moneycostsaswellastimecosts.Sohigh-skilledworkersarewillingtosupplylaboronlyatwageratesthatcompensatethemforthosecosts,whichexceedthewageratesatwhichlow-skilledworkersarewillingtosupplylabor.TheSourcesofEconomicInequalityFigure18.7(b)showsthedifferenceinsupplycurvesforhigh-skilledversus

low-skilledlabor.TheSourcesofEconomicInequalityFigure18.7(c)showsthedifferenceinequilibriumwagerates.Thehigherdemandandlowersupplyforhigh-skilledworkersrelativetolow-skilledworkerscreatesahigherequilibriumwagerateforthoseworkerswithgreaterhumancapital.TheSourcesofEconomicInequalityFigure18.8showshowtechnologicalchangeandglobalizationcombinedwithskilldifferenceshavewidenedtheegapbetweenlow-skilledandhigh-skilledlabor.Thedemandforlow-skilledlaborhasdecreasedandthewageratehasfallen.TheSourcesofEconomicInequalityThedemandforhigh-skilledlaborhasincreasedandthewageratehasrisen.TheSourcesofEconomicInequalityDiscriminationHumancapitaldifferencescanexplainsomeoftheeconomicinequalityweobserve.Discriminationisanotherpossiblesourceofeinequality.Ifthemarginalrevenueproductofoneraceoronesexisperceivedtobehigherthanthatofanotherraceoranothersex,theequilibriumwagerateswillvaryacrosseachracialorgendergroup,despiteholdingthelevelofhumancapitalconstant.TheSourcesofEconomicInequalitySupposethatfirmsperceivewhitemalestobemoreproductiveworkersthanblackfemales.Thentheperceivedmarginalrevenueproduct(whichisalsothelabordemandcurve)forwhitemenwouldbehigherthanthatforblackwomen.TheSourcesofEconomicInequalityFigure18.9showsthepotentialeffectofdiscriminationofthewageratesofwhitemenandblackwomen.Ifblackwomenarediscriminatedagainst,theperceivedMRPislowerandtheirwagerateandemploymentleveldecrease.TheSourcesofEconomicInequalityIfwhitemenarediscriminatedfor,theperceivedMRPishigherandtheirwagerateandemploymentlevelincrease.TheSourcesofEconomicInequalityEconomistsdisagreetotheextentthatdiscriminationpervadesthelabormarket.Onelineofreasoningstates:Firmsthatdiscriminatewouldhavehigherproductioncosts(payhigherwagesforthesamemarginalrevenueproduct)thanthosethatdonot.Ifthislineofreasoningiscorrect,1.Theprofitmarginsforthefirmspracticingdiscrimination willbelower.2.Themarketpricesoftheirgoodsandserviceswouldbe higherthannon-discriminatingfirms.TheSourcesofEconomicInequalityEitherway,themarketpressuresincreasetheopportunitycosttofirms(andtheconsumerswhobuytheirproduct)forpracticingdiscrimination,eventuallyeliminatingthesepractices.Anotherlineofreasoningisthatclaimsofsexdiscriminationcanbeexplainedbydifferencesbetweenthemenandwomenregardingtheirwillingness,ontheaverage,tospecializeinprovidingegeneratinglaborversusprovidingnon-egeneratinglaborinthehome.TheSourcesofEconomicInequalityMorewomenthanmenworkathomeforaportionoftheiradultlifewhileengagedinchildrearingand/orrunningthehousehold.Thisallocationoftimemeansthatwomen’swageswillbelower,ontheaverage,thanmen’swages.Accountingforthisdifferenceinlaborspecializationhasbeenfoundtoexplainmuchofthewagedifferentialsbetweenmenandwomen.TheSourcesofEconomicInequalityUnequalWealthTheinequalityofwealth(excludinghumancapital)ismuchgreaterthantheinequalityofe.Thisinequalityarisesfromsavingsandwealthtransfersbetweengenerations.Therearetwosignificantaspectsofintergenerationalwealthtransfersthatincreaseeconomicinequality:1.Debtcannotbetransferredacrossgenerations2.MarriageconcentrateswealtheRedistributionThethreemainwaysgovernmentsintheUnitedStatesredistributeeareetaxesemaintenanceprogramsSubsidizedserviceseRedistributioneTaxesTheU.S.federalgovernmentandmoststategovernmentstaxes.Bytaxingesofdifferentlevelsatdifferenttaxrates,economicinequalitycanbedecreased.Aprogressiveetaxisonethattaxeseatanaverageratethatincreaseswithe.TheU.S.etaxsystemandallstateetaxsystemsareprogressiveetaxsystems.eRedistributionAregressiveetaxisonethattaxeseatanaverageratethatdecreaseswithe.Aproportionaletax(alsocalledaflat-rateetax)isonethattaxeseataconstantaveragerateforallelevels.eRedistributioneMaintenanceProgramsThreemajortypesofprogramsprovidedirectpaymentstoindividuals:SocialsecurityprogramsUnemploymentcompensationWelfareprogramseRedistributionSubsidizedServicesAgreatdealofredistributiontakestheformofsubsidizedservices—servicesprovidedbythegovernmentatpricesbelowthecostofproduction.Anexampleisprimaryandsecondarypubliceducation,aswellasstatecollegesanduniversities.Thestudentsattheseinstitutionsgenerallypaytuitionandfeesthatrangefrom20to25%oftheactualcostofeducatingacollegestudent.Thefamiliesofthesestudentsenjoyasizeablesubsidyforacquiringhumancapital.eRedistributionTheScaleofeRedistributionMarketetellsuswhatahouseholdearnsinabsenceofredistribution.Startwithmarketethensubtracttaxesandaddtheamountsreceivedfromthegovernment.In2001,the20percentofhouseholdswithlowestesnetbenefitsthatincreasetheirshareoftotalefrom0.9percentto4.6percent.In2001,the20percentofhouseholdswithhighestespaidnettaxesthatdecreasedtheirshareofefrom55.6percentto46.7percent.eRedistributionFigure18.10showsthescaleofgovernmentredistributionin2001.Thebluecurveshowthedistributionofmarketedistribution.Thegreencurve,thedistributionaftertaxesandbenefits,is……moreequalthanthedistributionofmarkete.eRedistributionThethreeloweregroupsgain……andthehighestegrouploses.eRedistributionTheBigTradeoffRedistributingeleadstoatradeoffbetweenequityandefficiency,knownasthebigtradeoff.Programstoredistributee