The following income distribution data are for Brazil. Quintile Percent Share Lowest 20% 3.0% Second quintile 6.9%
Question:
The following income distribution data are for Brazil.
Quintile | Percent Share |
Lowest 20% | 3.0% |
Second quintile | 6.9% |
Third quintile | 11.8% |
Fourth quintile | 19.6% |
Highest 20% | 58.7% |
Highest 10% | 43.0% |
(a) What are the cumulative income distributions by quintiles?
(b) Explain what the Gini coefficient is.
(c) Brazil’s national income is about $300 billion. What is the approximate dollar income of the bottom 20%? Bottom 40%?
(d) Brazil’s population is approximately 150 million. Suppose that each household makes the average income for its quintile. What is the level of poverty if the poverty line is $400 per capita? Calculate the average income shortfall and the poverty gap
(e) Suppose one percent of national income was transferred from the richest 20% of households to the poorest 20% of households. Explain clearly what happens to inequality (discuss what happens to the percent share of income to each quintile)
(f) Under the same transfer, what is the effect on poverty? Calculate and discuss what happens to the income shares, average income shortfall, and the poverty gap.
Consider the following distribution of income in a 12-person economy, with the modern urban wage = 10, the traditional rural income = 2, and the informal urban wage = 4: (2,2,2,2,4,4,4,4,10,10,10,10).
(a) Suppose all rural incomes increase to 3, other things equal. How would this type of growth be characterized? Why? what will happen to the income shares of each quintile?
Expert Answer:
a The cumulative income distribution by quintiles be 100 3069118196587 though in our caseThe ... View the full answer
