Assignment:
Income Distribution
1)Suppose you are given the following data on household income distribution for the USA and Chinese economies:
PRC USA
Household Quintile Income Income
(Percentages) (Percentages) (Percentages)
Lowest Quintile 5.7 3.4
Second Quintile 9.8 8.6
Third Quintile 14.6 14.6
Fourth Quintile 22.0 23.2
Highest Quintile 47.9 50.2
a)Calculate the cumulative distribution of income for both economies.
b)Construct the Lorenz Curve for both economies in the same graph.
c)Which Income distribution appears to be more unequal? Why.
Suppose you know that the Gini Coefficients for the countries are as follows USA=.468 and China = .415:
d)Which Income Distribution is more unequal now? How do you know?