What is a lorenz curve? A lorenz curve graphs the cumulative population vs cumulative income, from lowest to highest. In doing so, societies with high levels of equality will be closer to a linear line. (e.g. 50% of people earn 50% of income). However, most countries have a bowed in curve as the top 10% may have 50% of income.
Australia's Gini coefficient for income is ~0.32. Brazil's is ~0.53. What does this say about the comparative distribution of income between the two countries. This shows how the Brazilian curve is more bowed in than the Australian curve, indicating a higher level of inequality than that of Australia.
How does income tax help to redistribute income in Australia? Income tax can be split into brackets. This means that those who earn more income can be taxed more, and those who earn less can be taxed less so that society is more equal. An important thing to note is that this does not address wealth, which makes up a major portion of inequality.
The Lorenz Curve
~7%, 40%
~4%, 60%
Income is more equal
Wealth
The income curve would become closer to, or more curved than it.
Income - tax brackets and taxing the rich. Wealth. PROPERTY TAX AND COMMUNISM
Income Distribution Data
income quintile: the fifths corresponding to amount of income
lorenz curve: i have already done this question
Multiple choice questions
d
c
a
b
Data interpretation - wealth distribution
(i) 1m (ii) 0%
Education. Natural Talent. Luck
Direct: government services and payments. Indirect: infrastructure and health and whatnot.