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Suppose that the table below shows the income shares by quintile for two countries: Econoland and Socioland. Quintile Econoland Socioland First 5% 5% 10% 10%
Suppose that the table below shows the income shares by quintile for two countries: Econoland and Socioland. Quintile Econoland Socioland First 5% 5% 10% 10% Second 10% 15% Third 5% 20% Fourth 20% 25% Fifth 50% 30% i. Calculate the cumulative income shares for each country and fill them in using the spaces provided in the table above. (2 points) ii. Use a blue pen to outline Econoland's cumulative income shares (i.e., Lorenz curve) and a red pen to draw Socioland's cumulative income shares (i.e., Lorenz curve) on the graph below. The first quintile has been provided. (2 points) 100 80 60 40 -20 20 40 60 80 100 iii. Which of the two countries do you think has the largest Gini coefficient? Describe your reasoning for making that choice. (1 point) iv. Do you think that one country has fairer income distribution that the other? If so, why? (2 points)
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