Addressing income and wealth inequality
| English | Chinese | Pinyin |
|---|---|---|
| Lorenz curve | 洛伦兹曲线 | luò lún zī qū xiàn |
| Gini coefficient | 基尼系数 | jī ní xì shù |
| inheritance | 继承 | jì chéng |
| progressive taxes | 累进税 | lèi jìn shuì |
| transfers | 转移支付 | zhuǎn yí zhī fù |
| redistribution | 再分配 | zài fēn pèi |
Measuring the gap between rich and poor
- Two countries can have the same average income yet feel utterly different — one shares it evenly, the other hoards it at the top.
- Economists measure that spread with the Lorenz curve 洛伦兹曲线 and the Gini coefficient 基尼系数.
Inequality policy route
Follow how policy can change disposable income and opportunity.
On a Lorenz diagram, greater inequality is shown by the curve:
The line of equality is the 45° line; the more the Lorenz curve bows below it, the more unequal.
The Lorenz curve
- The Lorenz curve plots the cumulative share of income against the cumulative share of population.
- Perfect equality is the 45° line; the more the curve sags below it, the more unequal the distribution.
The further the Lorenz curve bows below the line of equality, the greater the inequality.
A Gini coefficient of 0 represents:
Gini runs from 0 (perfect equality) to 1 (one person has all income).
The closer the Gini coefficient is to ______, the more equal the distribution.
Gini = 0 is perfect equality; 1 is maximum inequality.
The Gini coefficient
- The Gini coefficient = the area between the line of equality and the Lorenz curve, as a fraction of the whole triangle.
- It runs from 0 (perfect equality) to 1 (one person has everything). Higher = more unequal.
A progressive tax takes a larger percentage of income from higher earners.
Progressive taxation is a key tool for reducing income inequality.
Match each policy to how it reduces inequality.
Taxes, transfers and human-capital spending all narrow the income gap.
Causes and policies
- Causes: differences in wages, wealth, inheritance 继承, education, and unemployment.
- Policies to reduce it: progressive taxes 累进税 (higher rates on higher incomes), benefits/transfers 转移支付, and spending on education and healthcare.
Equality vs efficiency trade-off. Heavy redistribution 再分配 can blunt incentives to work and invest. Governments weigh fairness against the efficiency cost.
You've got it
- the Lorenz curve shows income share vs population share; sag below the 45° line = inequality
- the Gini coefficient runs 0 (equal) to 1 (one person has all)
- reduce inequality with progressive tax, benefits, and education/health spending