Chap07 Income Redistribution Conceptual Issues：Conceptual Issues.ppt

Chapter 7 – e Redistribution: Conceptual Issues
Public Economics
1
Introduction
Will provide framework for thinking about the normative and positive aspects of government e redistribution policy.
2
Introduction
Some questions whether economists should be concerned with distributional issues.
Value judgments embodied in the “right” e distribution.
No scientific basis for the “right” distribution.
3
Introduction
Focus on efficiency alone has problems.
That focus, too, is a value judgment.
Multiple equilbria.
Decision makers do care about the e distribution; economic analysis ineffective if it doesn’t consider this policy-maker constraint.
4
Distribution of e
Can analyze household e, and see how equally or unequally the “pie” is distributed.
Table shows the percentage of money e among households for more than 30 years.
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Table
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Distribution of e
Richest 20% receives about 50% of total e.
Poorest 20% receives about 4% of total e.
Inequality has increased over time.
7
Distribution of e:Poverty
The poverty line is a fixed level of real e which is considered enough to provide a minimally adequate standard of living.
Inherently arbitrary, but still a useful benchmark.
Trends over time
Differences across groups
8
Distribution of e:Poverty
Poverty line for a family of 4 was $18,244 in 2001.
Median household e more than double that, $42,228.
Table shows poverty rates for selected groups in 2001.
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Table
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