Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Look up keyword
Like this
1Activity
0 of .
Results for:
No results containing your search query
P. 1
The Distribution of Income

The Distribution of Income

Ratings: (0)|Views: 1|Likes:
Published by ClassOf1.com
In 2004 the median household income in the United States was $48,201 half of households earned more income and half earned less. There is substantial variation in household income, with some households earning much more and others earning much less. Income can be measured in different ways, and two income measures are relevant for our discussion.
In 2004 the median household income in the United States was $48,201 half of households earned more income and half earned less. There is substantial variation in household income, with some households earning much more and others earning much less. Income can be measured in different ways, and two income measures are relevant for our discussion.

More info:

Categories:Types, School Work
Published by: ClassOf1.com on Apr 30, 2013
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

04/30/2013

pdf

text

original

 
 
Economics
LEARN TO EXCEL
Homework Help
24/7 Support
Step-by-Step Solutions
Experienced TutorsDetailed Explanationwww.classof1.com/homework-help/economics---
 
 
Sub: Economics Topic: International Trade
*
The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not forsubmitting the same in lieu of their academic submissions for grades.
The Distribution of Income
 
In 2004 the median household income in the United States was $48,201 half of households earnedmore income and half earned less. There is substantial variation in household income, with somehouseholds earning much more and others earning much less. Income can be measured in differentways, and two income measures are relevant for our discussion.
Market income
is defined as all earnings received from labor and capital markets. It includeswages and salaries, as well as earnings from bonds, stocks, and real estate.
Disposable income
equals market income, plus government transfers, minus taxes paid. Thetransfers include income supplements, Social Security payments, food stamps, and housingassistance. The taxes include state and federal income and payroll taxes, as well as localproperty taxes.Three key factors explain these substantial differences in market income:
Differences in labor skills and effort.
Some people have better labor skills more human capitalthan others, so they earn higher wages. Labor skills are determined by innate ability andeducation. In addition, some people work longer hours or at more demanding jobs, so theyearn more income.
Luck and misfortune.
Some people are luckier than others in investing their money, starting abusiness, or picking an occupation. Among the unlucky people are those who develop healthproblems that make it difficult to earn income. Among the lucky people are those who inheritwealth and earn income by investing their inheritance.
Discrimination.
Some people are paid lower wages or have limited opportunities for educationand work because of their race or gender.
 
 
Sub: Economics Topic: International Trade
*
The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not forsubmitting the same in lieu of their academic submissions for grades.
Going from market income to disposable income, the largest changes occur at the top and the bottomof the income distribution. Last three decades the college premium has increased significantly. At thesame time, the premium for advanced degrees increased. Why did the demand for skill increase overthe last three decades? There are two main reasons:
Technological change.
Advances in technology have simultaneously decreased the demand forless-educated workers and increased the demand for college graduates and people withadvanced degrees. While the new technology has made it possible to replace many low-skilledworkers with smart machines and computers, it has also increased the demand for workerswho have the education and skills required to produce the new technology and use it.
Increased international trade.
An increase in international trade means more exports andimports. Trade allows developed countries like the United States to easily export goodsproduced with high-skilled labor and import goods produced with low-skilled labor. As a result,the expansion of international trade in the last three decades has increased the demand forhigh-skilled workers and decreased the demand for low-skilled workers in the United States.

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->