What has happened to thedistribution of income recently?
•The richest families have become a little richer and others a little poorer
What is aLorenz Curve?
•A graph of the actual cumulative distribution of income compared to a perfectly equal cumulative distribution of income
What does theLorenz Curve show?
•It has shifted only slightly inward, and therefore closer to the perfect equality line between 1929 and 2007
What is poverty?
•Poverty can be defined in absolute terms or relative terms
What is poverty in absolute terms?
•A dollar figure that represents some level of income per year required to purchase some minimum amount of goods and services to meet basic needs
What is poverty in relative terms?
•A level of income that places a person or family in the lowest, say, 20 percent of all persons or families receiving income
What is thepoverty line?
•The level of income below which a person or family is considered to be poor. •It is based on the cost of a minimal diet multiplied by three because low-income families spend about one-third of their income on food.
Federal antipoverty programs areclassified into two broad types of entitlements:
1. Cash assistance2. In-kind transfers
What are examples of cash transfer programs?
•Social Security•Unemployment compensation•Temporary assistance to needy families (TANF)
What arein-kind transfers?
•Government payments in the form of goods and services, rather than cash
What are some examples of in-kindtransfers?
•Medicare•Medicaid•Food stamps•Housing assistance
What are some criticisms of welfare?
What are some reform proposals?
•Negative income tax•Workfare
What is anegative income tax (NIT)?
•A plan under which families below a certain break-even level of income would receive cash payments that decrease as their incomes increase
What is workfare?
•To keep their benefits, welfare recipients must perform some work activities within two years of receiving welfare or risk losing benefits
How does discrimination affect wages?
•Discrimination in the workplace can cause the equilibrium wage to be lower for the group that is being discriminated against
What iscomparable worth?
•The principle that employees who work for the same employer must be paid the same wage when their jobs, even if different, require similar levels of education, training, experience, and responsibility