ECON 1000 Lecture Notes - Lecture 16: Negative Income Tax, Invisible Hand, Lorenz Curve
11 Apr 2016
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Document Summary
Invisible hand is blind, not equitable only efficient. Table showing income and total % of candain income. Government transfers (subsidized housing, in us food stamps, child credits, single parent credits) Proportionately tax, to take money from richer to give to poorer. Either fed directly gives or gives to provinces who give through welfare programs. Progressive system: tax rich highly and give to poor. Bottom 20%, middle 60% incomes increase slightly, top 20% increase greatly. First draw lorenz curve: what proportion of population get what proportion of income. If perfectly equal, would be a straight line. Gini coefficient is area a/ area a+ area b. With perfect equality, gini coefficient equals 0. Perfectly unequal economy (one person makes all money), equals 1. Gini coeffcieint went from . 28 in 1996 to . 32 in 2010. Poorer people, bottom 40% have less relative wealth than had in 1999. Top and fourth have more, especially top.
