Progress and Poverty - Stephen Kinsellastephenkinsella.net/.../uploads/...pandpoverty-1.pdf ·...
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1 Progress and Poverty Stephen Kinsella MDU MG4014 Macroeconomics Lecture 2 Today • Measuring Poverty(GINI) and Progress (GDP) • Data • Are we rich because they are poor? • Does income distribution really matter? • Some more stylised facts • Poverty and progress: some international comparisons • Productivity, surplus, and incentives. Gross Domestic Product • The basic performance measure for an economy is the measurement of its ability to “produce” goods and services.
Transcript of Progress and Poverty - Stephen Kinsellastephenkinsella.net/.../uploads/...pandpoverty-1.pdf ·...
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Progress and PovertyStephen Kinsella
MDU MG4014 MacroeconomicsLecture 2
Today•Measuring Poverty(GINI) and Progress (GDP)
• Data
• Are we rich because they are poor?
• Does income distribution really matter?
• Some more stylised facts
• Poverty and progress: some internationalcomparisons
• Productivity, surplus, and incentives.
Gross DomesticProduct
•The basic performance measure for aneconomy is the measurement of its abilityto “produce” goods and services.
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Gross Domestic Product
• Gross Domestic Product (GDP) is a measureof the output of an economy in a given timeperiod.
• GDP is the total value of all final goods andservices produced in the economy during agiven time period.
Gross Domestic Product
• GDP measures the total goods and servicesavailable to the various potential consumers: -households, firms, and government.
• In principle GDP equals income (GDI): - thevalue of all payments by producers to factorsof production: - labor, land, and capital.
Real vs. Nominal GDP%
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Measuring Growth
• One way to measure growth is growth in totaloutput.
• In terms of individual well-being, growth can bemeasured in per capital terms.
Gini
www.wider.unu.edu/conference/conference-2005-3/conference-2005-3-papers/tony-shorrocks-presentation.ppt
GINI = 10%
GINI = 20%
60%
40%
70%
30%
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GINI = 30%
GINI = 45%
80%
20%
95%
5%
Gini value
= “excess share” of rich person in a
2-person distribution
Gini value
= “excess share” of rich person in an
n-person distribution
if ...
1 rich and n-1 equally poor
10 person distribution
8% 8% 8% 8% 8% 8% 8% 8% 8%
28%
0%
5%
10%
15%
20%
25%
30%
GINI = 45%
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10 person distribution
2% 2% 2% 2% 2% 2% 2% 2% 2%
72%
0%
10%
20%
30%
40%
50%
60%
70%
80%
GINI = 62%
Finland, G=27%
0.23
0.63
0
0.2
0.4
0.6
0.8
1
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Zimbabwe, G = 73%
-0.23
0.17
0 0.1 0.2 0.3 0.4 0.6 0.7 0.8 0.9 1.0
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The World
0
0.2
0.4
0.6
0.8
1
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Data
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=562085
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Clark, 2001
Income and Population Growth, UK, 1250-2000
Fertility and Real Wages
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Today•Measuring Poverty and Progress
•Data
•Are we rich because they are poor?
•Does income distribution really matter?
•Some more stylised facts
•Poverty and progress: some internationalcomparisons
•Productivity, surplus, and incentives.
Next Time
•Read Bowles et al, cht 15, 403--444(HARD)
