EC207 Lecture Notes - Lecture 7: Simon Kuznets, Gini Coefficient, Brad Delson
Document Summary
Kuznets ratio: named after nobel laureate simon kuznets, often used as a measure of the degree of inequality between high-and low-income groups in a country. Another common way to analyze personal incomes stats is to construct what is known as a lorenz curve. Steps: sort the population in ascending order of income, the numbers of income recipients are plotted on the horizontal axis, not in absolute terms but in cumulative percentages. The vertical axis shows the share total of income received by each percentage in the population. Cumulative up to 100%, meaning both axes are the same length. The entire figure is enclosed in a square, and a diagonal line is drawn from the lower left corner (the origin) of the square to the upper right corner. At every point on that diagonal the percentage of income received is exactly equal to the percentage of the income recipients.
