Microeconomics ch 20- income inequality, poverty, and discrimination
how international trade, immigration and decline in unionism has caused growing inequality
-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
What are discrimination costs to society as well as individuals
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What are the different types of labor market discrimination?
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What is a statistical discrimination?
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assumptions of occupational segregation model
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discrimination coefficient
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effects of crowding- of occupational segregation model
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eliminating occupational segregatoin
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graph occupational segregation model
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graph the african american wage and employment level in the taste-for-discrimination model
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how has family wealth changed in the US and why?
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how is discrimination represented on the PPC curve.. graph it!
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occupational segregation: the crowding model definition
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prejudice and the market african-american-white wage ratio
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taste-for-discrimination model
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what is the labor market example of statistical discrimination?
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what is the relationship between competition and discrimination?
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Causes of growing inequality
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
the equality efficiency trade off
greater income equality comes at the opportunity cost of reduced production and income, vice versa- society must choose- shirnkage of pizza
trends in income inequality over time in the US
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%
the case for equality- maximizing total utility
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
equality vs efficiency
main policy issue concerning income inequality how much is necessary and justified
graph the utility maximizing distribution of income!!
pg 418
definition of discrimination-
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.
** consumption inequality
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
the case for inequality- incentive and efficiency
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
