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trends in income inequality over time in the US
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in absolute dollar amounts entire distribution of income moving upward in relative distribution of income more unequal since 1970- richest 20% receive 50% income, poorest receive 3.4%
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Causes of growing inequality
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1) greater demand for highly skilled workers- ex health care, internet industries, computer software
2) demographic changes- baby boomers 1970-80 entered market greater income inequality, also more divorced single earner households- poverty rate very high for female-headed households
3) international trade, immigration, and decline in unionism
2) demographic changes- baby boomers 1970-80 entered market greater income inequality, also more divorced single earner households- poverty rate very high for female-headed households
3) international trade, immigration, and decline in unionism
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how international trade, immigration and decline in unionism has caused growing inequality
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-international trade competition reduced demand for less skilled workers ex. automobiles
-transfer of jobs to lower wage workers in developing countries
-surge in immigration of unskilled workers
-decline in unionism- usually equalize wages
-transfer of jobs to lower wage workers in developing countries
-surge in immigration of unskilled workers
-decline in unionism- usually equalize wages
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** consumption inequality
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remained relatively constant over several decades- products consumed by rich and poor more similar in functionality, products and experiences once only for rich now commonplace- argue that inequality not as bad
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equality vs efficiency
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main policy issue concerning income inequality how much is necessary and justified
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the case for equality- maximizing total utility
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income equality maximizes total consumer satisfaction (total utility) from a particular level of income- causes the marginal utility of the last dollar spent to be the same for both people- income equality yields greater combined total utility than income inequality does
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graph the utility maximizing distribution of income!!
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pg 418
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the case for inequality- incentive and efficiency
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way in which income distributed important determinant of amount of output produced- reduces incentives for both o earn high incomes
taxes are a reduction in the rewards from increased productive effort, redistribution through transfers is a reward for diminished efforts
taxes are a reduction in the rewards from increased productive effort, redistribution through transfers is a reward for diminished efforts
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the equality efficiency trade off
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greater income equality comes at the opportunity cost of reduced production and income, vice versa- society must choose- shirnkage of pizza
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definition of discrimination-
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practice of according people inferior treatment (for example hiring, occupational access, education and training, promotion, wage rate, and working conditions) on the basis of some factor such as race gender or ethnicity.
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taste-for-discrimination model
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discrimination coefficient
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prejudice and the market african-american-white wage ratio
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graph the african american wage and employment level in the taste-for-discrimination model
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what is the relationship between competition and discrimination?
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What is a statistical discrimination?
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what is the labor market example of statistical discrimination?
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occupational segregation: the crowding model definition
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assumptions of occupational segregation model
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graph occupational segregation model
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effects of crowding- of occupational segregation model
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eliminating occupational segregatoin
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What are discrimination costs to society as well as individuals
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how has family wealth changed in the US and why?
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What are the different types of labor market discrimination?
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how is discrimination represented on the PPC curve.. graph it!
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