Uneven income distributionPresented By:-Sunny AggarwalSiddharth Dhone

What is gross national income(GNI)….????

Gross national income (GNI) comprises the total value produced within a country (i.e. its GDP), together with its income received from other countries (notably interests and dividends), less similar payments made to other countries.

GNI of India 6095230 Crore

Source: Economic Survey 2010 - 11

What is distribution of income…???

In Economics income distribution is how a nation’s total economy is distributed amongst its population.

Per Capita Income Rs. 46492

Source: Economic Survey 2010 - 11

What is income inequality……???

• When income is not proportionally distributed among  the  population  of  the  country,  it  is called income inequality.

• India is 119th country in the world in terms of HDI measured by UNDP.

• Unemployment rate is India is about 10.8%• Recent surveys have shown that the top 10% of the

income groups share around 33% of the total income of the country

• A quarter of the population of the country has a earning less than the minimum level of $0.40 per day

Wealth distribution in India

• Top 1%: 16% of wealth• Top 5%: 38% of wealth• Top 10%: 53% of wealth• Bottom 80%: 30% of wealth• Bottom 50%: 8% of wealth• Bottom 20%: 1% of wealth• Bottom 10% 0.2% of wealth

Source: University of Western Ontario, 2006

UNEVEN INCOME DISTRIBUTION

• Income distribution refers to the spread of a country's income percentage throughout its population and yields a ratio between income of the richest in a country to the poorest.

• When income is not proportionally distributed, it is called income inequality.

Causes of income inequality

• Labour Market.• Developments Patterns• Innate Ability• Wealth Condensation• Education• Risk Taking Behaviour• Labour – Leisure Preference• Gender• Culture

MEASURES OF UNEVEN INCOME DISTRIBUTION

1. Lorenz Curve2. Gini Coefficient

•The Lorenz Curve is a graphical representation of the proportionality of a distribution.•  It  is often associated with income distribution calculations and commonly used in the analysis of inequality.

GINI COEFFICIENT

• The Gini coefficient is a measure of the inequality of a distribution.

• A value of 0 expressing total equality and a value of 1 maximal inequality.

• It is commonly used as a measure of inequality of income or wealth.

Advantages of Gini coefficient as a measure of inequality

• The Gini coefficient's main advantage is that it is a measure of inequality by means of a ratio analysis.

• It can be used to compare income distributions across different population sectors as well as countries, for example the Gini coefficient for urban areas differs from that of rural areas in many countries.

• The Gini coefficient satisfies four important principles:– Anonymity– Scale independence– Population independence– Transfer principle

Disadvantages of Gini coefficient as a measure of inequality

• The Gini coefficient is a point-estimate of equality at a certain time, hence it ignores life-span changes in income.

• While the Gini coefficient measures inequality of income, it does not measure inequality of opportunity.

• If two countries have the same Gini coefficient but one is rich and the other is poor, it can be seen to measure two different things.

Country Comparison to the World

Country Distribution of family income - Gini index

Argentina 26.7

Australia 30.5

Bangladesh 33.2

Brazil 56.7

Canada 32.1

China 41.5

Czech Republic 26

France 32.7

India 36.8

United States 45

https://www.cia.gov

impacts of income inequality

• Social Cohesion• Population Health• Utility, Economic Welfare & Distributive Efficiency• Economics Incentives

REFERENCES:1. Economic Survey 2010 – 112. University of Western Ontario3. World Bank: World Development Report 2000/2001,

chapter 34. https://www.cia.gov/library/publications/the-world-

factbook/fields/2172.html5. Campbell R.M.C; Stanley L. Brue, “Contemporary Labor

Economics”, Tata McGraw Hill, pp 331-333.