Consider

a village in which there are 20 landowners, and 80 others who farm the land as sharecroppers, but who own no land

Initially, the farmers (sharecroppers) pay a rent of 60% of their crop to the landowners.

So, the farmers' initial share of income is 40%.

A new land reform policy raises the farmers' crop share to 60%.

This legally forces the landowners to allow the farming sharecroppers to earn 60% of the total income in the village.

(a)

In an appropriately labelled diagram, draw two Lorenz curves to

depict income distribution in this village

before and after the land reform policy is implemented.

(b)

Using the diagram in (a), calculate the Gini coefficient of income before and after the land reform policy is implemented.