Should incomes in the us be distributed equally

Income Distribution in Select Countries. Source: U. Census Bureau Table 2. Table 10 shows the share of income going to each quintile of the income distribution for the United Kingdom in and Use this data to calculate what the points on a Lorenz curve would be, and sketch the Lorenz curve.

How did inequality in the United Kingdom shift over this time period? How can you see the patterns in the quintiles in the Lorenz curves? Share of Income Top quintile Income Distribution in the United Kingdom, and Using two demand and supply diagrams, one for the low-wage labor market and one for the high-wage labor market, explain how information technology can increase income inequality if it is a complement to high-income workers like salespeople and managers, but a substitute for low-income workers like file clerks and telephone receptionists.

Using two demand and supply diagrams, one for the low-wage labor market and one for the high-wage labor market, explain how a program that increased educational levels for a substantial number of low-skill workers could reduce income inequality. Review Questions Who is included in the top income quintile? What is measured on the two axes of a Lorenz curve? If a country had perfect income equality what would the Lorenz curve look like?

How has the inequality of income changed in the U. What are some reasons why a certain degree of inequality of income would be expected in a market economy? What are the main reasons economists give for the increase in inequality of incomes? The demand for skilled workers in the United States has been increasing. To increase the supply of skilled workers, many argue that immigration reform to allow more skilled labor into the United States is needed.

Explain whether you agree or disagree. Explain a situation using the supply and demand for skilled labor in which the increased number of college graduates leads to depressed wages. Given the rising cost of going to college, explain why a college education will or will not increase income inequality. Glossary Lorenz curve a graph that compares the cumulative income actually received to a perfectly equal distribution of income; it shows the share of population on the horizontal axis and the cumulative percentage of total income received on the vertical axis quintile dividing a group into fifths, a method often used to look at distribution of income.

Solutions Answers to Self-Check Questions A useful first step is to rank the households by income, from lowest to highest. Then, since there are 10 households total, the bottom quintile will be the bottom two households, the second quintile will be the third and fourth households, and so on up to the top quintile.

The quintiles and percentage of total income for the data provided are shown in the following table. Comparing this distribution to the U.

This pattern usually means that the income distribution in the example is more equal than the U. Just from glancing at the quintile information, it is fairly obvious that income inequality increased in the United Kingdom over this time: The top quintile is getting a lot more, and the lowest quintile is getting a bit less. Converting this information into a Lorenz curve, however, is a little trickier, because the Lorenz curve graphs the cumulative distribution, not the amount received by individual quintiles.

Thus, as explained in the text, you have to add up the individual quintile data to convert the data to this form. The following table shows the actual calculations for the share of income in versus The figure following the table shows the perfect equality line and the Lorenz curves for and As shown, the income distribution in was closer to the perfect equality line than the income distribution in —that is, the United Kingdom income distribution became more unequal over time.

Figure 3. In the market for low-wage labor, information technology shifts the demand for low-wage labor to the left. One reason is that technology can often substitute for low-wage labor in certain kinds of telephone or bookkeeping jobs. In addition, information technology makes it easier for companies to manage connections with low-wage workers in other countries, thus reducing the demand for low-wage workers in the United States.

In the market for high-wage labor, information technology shifts the demand for high-wage labor to the right. By using the new information and communications technologies, high-wage labor can become more productive and can oversee more tasks than before.

The following figure illustrates these two labor markets. The combination of lower wages for low-wage labor and higher wages for high-wage labor means greater inequality.

Figure 4. In the market for low-wage labor, a skills program will shift supply to the left, which will tend to drive up wages for the remaining low-skill workers. In the market for high-wage labor, a skills program will shift supply to the right because after the training program there are now more high-skilled workers at every wage , which will tend to drive down wages for high-skill workers. The combination of these two programs will result in a lesser degree of inequality.

In the market for high-wage labor, a skills program will shift supply to the right, which will tend to drive down wages for high-skill workers. Figure 5. Previous: Americans' views on how money and wealth should be distributed in the country are strongly correlated with their partisanship and ideology.

Income is also a factor. Attitudes vary little by age. The question on the fairness of money and wealth distribution does not include explicit assumptions about the causes of the current unequal distribution of income and wealth, nor does it discuss or imply any particular course of action designed to remedy the situation. Addressing the problem is a moot issue for many Republicans, a majority of whom say the distribution is fair as it is.

Most Democrats, on the other hand, presumably endorse some mechanism by which the distribution of wealth and income could be made less unequal. As was the case with the basic fairness question, agreement that the government should impose heavy taxes on the rich to redistribute wealth is highly related to partisanship and ideology.

Additionally, younger Americans and those with lower incomes are above average in their agreement. One in four are in essence free-market advocates -- sanguine about the distribution of wealth and income and not supporting heavy taxes on the rich. A small percentage have the somewhat contradictory views of believing that the distribution is fair but favoring heavy taxes on the rich.

Surveys conducted over the past 30 years have consistently shown that about six in 10 Americans fundamentally believe that the way income and wealth are distributed in the U. Democrats are much more likely to hold this view than Republicans, helping explain why inequality has been a major focus for President Barack Obama, a core part of the presidential campaign of Hillary Clinton, and a primary talking point when Sen.

Another reason could be politicians, who, in order to rally people to their side, try to generate feelings of greater difference and opposition--and therefore conflict--than actually exist. From this perspective one could claim that politicians obfuscate similarities by using galvanizing but elusive terms like "small government," "tax relief," and "freedom. Rawls' veil of ignorance deals with such superficial and irrelevant influences on what we think by prompting people to consider all possible socio-economic situations rather than just their own and the interests and ideologies that come along with that.

The veil of ignorance accomplishes something similar to blind taste testing. Take wine, for instance. If a person knows the appellation and price, and realizes that French wine is usually preferable to Finnish, his or her perception and opinion of how good each wine tastes will be influenced by these preconceived notions. Similarly, when we express opinions about politics and life in general, we can't help but be influenced by our own varying degrees wealth and ignorance of others' lives.

The veil of ignorance works to separate our core beliefs from the biases and prejudices we develop over time and through the subjective experience of being part of a certain class and demographic.

As for what this means about changing the level of inequality, which from our study seems almost unanimously objectionable, there are essentially two paths: education and taxation. Improving education works in a sense to change the input into the economy--better-educated workers are more resourceful and employable, and can move up the economic ladder. Changing taxation deals with the output--those who prosper pay more into the system than those without the same benefits.

Our study doesn't tell us anything about which of these two approaches to reducing inequality would be preferable, but in practical terms, bridging the huge gap between what we currently have and what we want to have would require a mixture of both. Our study also doesn't deal with how to bring what people say they want under the veil of ignorance into line with what they're willing to do when it's their money and resources that are about to be distributed.

It is one thing to get people to tell us what kind of society the would want to join, and another to get them part with their money in order to create that society. With all these objections in mind, it still seems that the political discourse could benefit from a Rawlsian approach.

Taking this path could help us understand what it is that we really want and then allow us to consider ways to get there. If our politicians also accepted this starting point, they might argue less about ideology and differences and more about paths to get closer to our common goal--a much less extreme level of inequality.

Social justice and optimal wealth distribution are highly complex topics, and it's hard to imagine that any study could dramatically change opinions about education, welfare, or tax reform. But consider this. When we ran the same basic experiment in Australia, we found Australians did not differ much from Americans in their views of the ideal distribution. When we ran another version of it with NPR listeners, and then readers of Forbes Magazine, the results were still basically the same.

And most likely, if you participated in one of our tests, your response too would have fallen in line with these findings. So whatever you think the current state of wealth distribution is, and whatever you believe the ideal level of wealth distribution to be under the veil of ignorance, there probably is a gap, and a large one, between the two. Awareness of the disparity between what we have and what we want implies that, ultimately, we as a society need to face the problem and find a solution.

Wolff, E. Norton M. Rawls, John.