Real wages (optional). In one of the many reports on stagnant incomes in the United States, we read this: “Practically every income group faced a decline in real wages during the 1980s. However, workers at the 33rd percentile experienced a 14 percent drop in the real wage, workers at the 66th percentile experienced only a 6 percent drop, and workers in the upper tail of the distribution experienced a 1 percent wage increase.”

(a) What is meant by “the 33rd percentile” of the income distribution?

(b) What does “real wages” mean?

Chapter 16 Exercises 357