Inequality

Class 1

Administrative

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Review

Technology doesn’t have to mean “high tech” Technology key to understanding nature of

particular jobs Compared technologies of four different

industries

Today

I. Measurement of Inequality

II. Sources of Inequality

III. Why is Inequality a problem?

IV. Inequality at work and discrimination

V. Inequality Data

I. Measurement of Inequality

How do we measure the equality or inequality of any distribution?

Variance – Measure of dispersion of a distribution. Formula?

Dealing with income, percentage of income each 10% (or 20% etc.) of recipients receive

I. Measurement of Inequality

Lorenz Curve

Start with lowest income recipient up to highest on horizontal axis

Vertical axis is percentage of income received

I. Lorenz Curve

I. Gini Ratio

Gini Ratio G=A/(A+B) Gini Ratios of various

nations What is happening to

world income equality/inequality among nations?

II. Sources of Inequality

Different levels of natural ability Different levels of human capital, i.e. acquired

skills and abilities Monopoly power Discrimination

III. Why is Inequality a Problem? Do we want incomes to be perfectly equal?

Why or why not? What happens if incomes are too unequal? How do we define “too” unequal? What

standard do we use? What is the impact of equality on social

cohesion? Does this matter?

IV. Inequality at Work and Discrimination What are the sources of gender inequality of

pay at work? What does it mean if we say women earn

$.78 cents for every dollar a man earns, what could be the causes of that?

Can any of the causes be something other than discrimination?

What might be the non-discriminatory sources of inequality?

IV. Inequality at Work and Discrimination Why might women choose different jobs from

men? What occupations did women traditionally

enter and what were the characteristics of those occupations?

Are any of the non-discriminatory sources of the gender wage gap likely also to apply to the racial wage gap?

V. Inequality Data Comparing full-time, year-round workers

1939 women earned 58% of what men earned 1981 women earned 59% of what men earned 1993 women earned 72% of what men earned 2004 women earned 77% of what men earned 2010 women earned 77% of what men earned

Controlling for occupation, industry, education, etc. Racial differences Sexual orientation Poverty levels CEO Pay

Next time

We begin unit on race, age and gender at work