Distribution+of+Income

=Distribution of Income = 
 * The income gap refers to the amount of income inequality in the nation
 * Several factors contribute to differences in income
 * Different economic and social backgrounds or difficulties
 * Different skills and talents
 * Different education
 * In a market economy, an individual's income is based largely on the value of the goods and services that person has to offer
 * People with resources and talents that are in high demand will earn more money than people whose resources and talents are not in such high demand
 * Measuring Income Inequality **
 * Example - if the richest 20% of families earn 49% of the total income, and the poorest 20% of families earn 5% of the total income, there is a high level of income inequality
 * The two ways to measure the amount of inequality in the distribution of income are the **Lorenz Curve** and the ** Gini Index **

** Lorenz Curve **   Gini Index ** **  Limitations of Income Distribution **
 * <span style="font-family: 'Lucida Sans Unicode', 'Lucida Grande', sans-serif;">Illustrates the amount that a nation's distribution of income varies from a perfectly proportional distribution of income
 * <span style="font-family: 'Lucida Sans Unicode', 'Lucida Grande', sans-serif;">To create a Lorenz Curve, economists plot the proportion of the total income that various percentages of the population received
 * <span style="font-family: 'Lucida Sans Unicode', 'Lucida Grande', sans-serif;">The more a Lorenz Curve dips below the 45-degree Equality Line, the greater the amount of income inequality
 * <span style="font-family: 'Lucida Sans Unicode', 'Lucida Grande', sans-serif;">Another statistical measure of income inequality
 * <span style="font-family: 'Lucida Sans Unicode', 'Lucida Grande', sans-serif;">It ranges from 0.0, where each family household receives an equal share of the total income, to 1.0, where one family or household receives all of the income
 * <span style="font-family: 'Lucida Sans Unicode', 'Lucida Grande', sans-serif;">Measures of income distribution tend to overemphasize income inequality for two reasons
 * <span style="font-family: 'Lucida Sans Unicode', 'Lucida Grande', sans-serif;">The data used to determine distribution of income are based on families' gross incomes before deductions, such as personal income taxes, Social Security, Medicare, health insurance, and union dues
 * <span style="font-family: 'Lucida Sans Unicode', 'Lucida Grande', sans-serif;">Income does not include capital gains or the value of noncash benefits that families or households may receive, such as food stamps, health benefits, or low-cost housing
 * <span style="font-family: 'Lucida Sans Unicode', 'Lucida Grande', sans-serif;">Most measures of income distribution do not differentiate among families or households of different sizes or ages or with different numbers of wage earmers - people usually earn different amounts of income at different stages of their lives, and families of different sizes and ages need different amounts of income

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