IRE240H1 Lecture Notes - Lecture 2: Lorenz Curve, Gini Coefficient, Mean Absolute Difference

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Distinguish size distribution vs. factor distribution of income. Factor distribution: refers to the division of income b/w factors of production (labor, capital) Size distribution: refers to the division of income among individual persons or families. Annual income most common measure: reflects both hours of work per year and average hourly wage (as well as non- wage income) E. g. suppose person a has twice the income of person b b/c person a chooses to work full-time and b chooses to work half-time. E. g. suppose a typical full-time male works 40hr/week and a full-time female works. Is the fact that the typical female earns. Lifetime income: conceptually a better measure of economic well-being but difficult to measure. Some individuals (e. g. university students) may have a low annual income for a few years but expect to have a high lifetime income. Is this an equity concern: consider an example of march 2015 ta strike at uoft.

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