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Chapter 20 – Income distribution and poverty

Chapter 20 – Income distribution and poverty. Income distribution in a market economy. Determined by markets Affected by initial endowments Estate tax (“death tax”). Lorenz curve. Differences in income inequality. Poverty programs. Cash transfers In-kind transfers.

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Chapter 20 – Income distribution and poverty

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  1. Chapter 20 – Income distribution and poverty

  2. Income distribution in a market economy • Determined by markets • Affected by initial endowments • Estate tax (“death tax”)

  3. Lorenz curve

  4. Differences in income inequality

  5. Poverty programs • Cash transfers • In-kind transfers

  6. Trends in income distribution • Inequality decreased until 1980s • Inequality rose from 1980s until mid 1990s • Inequality declined in mid- and late-1990s • Inequality rose since 2000.

  7. Tax structures • Progressive – T/Y rises as Y rises • Proportional – T/Y is constant • Regressive – T/Y declines as Y rises (T = taxes, Y = income)

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