Chapter 8 - Income distribution. In this chapter you will: Learn about the distribution of income among Canadian households, how this distribution is measured, and the factors underlying the distribution; consider the causes of poverty and the way poverty is measured; analyze the effectiveness of government intervention to change the distribution of income. | Understand Economics Chapter 8 Income Distribution Copyright © 2002 by McGraw-Hill Ryerson Limited. All rights reserved. 2nd Edition by Mark Lovewell and Khoa Nguyen Chapter Objectives In this chapter you will: learn about the distribution of income among Canadian households, how this distribution is measured, and the factors underlying the distribution consider the causes of poverty and the way poverty is measured analyze the effectiveness of government intervention to change the distribution of income Copyright © 2002 by McGraw-Hill Ryerson Limited. All rights reserved. * Canadian Distribution of Income Canada’s distribution of income can be shown using the a Lorenz curve. This curve is a graph showing the cumulative distribution of income for households categorized into five groups based on their income levels. Copyright © 2002 by McGraw-Hill Ryerson Limited. All rights reserved. * Income Distribution in Selected Years Figure , Page 196 Lowest 20% Second 20% Third 20% Fourth 20% | Understand Economics Chapter 8 Income Distribution Copyright © 2002 by McGraw-Hill Ryerson Limited. All rights reserved. 2nd Edition by Mark Lovewell and Khoa Nguyen Chapter Objectives In this chapter you will: learn about the distribution of income among Canadian households, how this distribution is measured, and the factors underlying the distribution consider the causes of poverty and the way poverty is measured analyze the effectiveness of government intervention to change the distribution of income Copyright © 2002 by McGraw-Hill Ryerson Limited. All rights reserved. * Canadian Distribution of Income Canada’s distribution of income can be shown using the a Lorenz curve. This curve is a graph showing the cumulative distribution of income for households categorized into five groups based on their income levels. Copyright © 2002 by McGraw-Hill Ryerson Limited. All rights reserved. * Income Distribution in Selected Years Figure , Page 196 Lowest 20% Second 20% Third 20% Fourth 20% Highest 20% Average of total 1951 1961 1971 1981 1991 1998 Average Income (1998) 10 688 24 579 39 780 60 593 113 374 49 797 Percentage of Total Pre-Tax Income Received by Each Fifth of Households Copyright © 2002 by McGraw-Hill Ryerson Limited. All rights reserved. * The Lorenz Curve Figure , Page 197 Lowest Second Third Fourth Highest Lowest 20% (a) Lowest 40% = + (b) Lowest 60% = + (c) Lowest 80% = + (d) 100% = + (e) 60 60 0 20 40 80 Households (%) Cumulative Share of Income (%) 20 40 80 100 100 Distribution of Household Income Cumulative Distribution of Household Income Share of Income in 1998 (%) Cumulative Share of Income in 1998 (%) Perfect Equality Perfect Inequality a b c d e Copyright © 2002 by McGraw-Hill Ryerson Limited. All rights reserved. * .
