Economics of Transition      Aug - Dec 2003        Economics 232  

Exercise #2

Income Inequality during Transition

Due Monday, Sept 1, in class

Using World Development Indicators and World Development Report reference books in the library and/or the World Development Indicators CD-ROM (which may be checked out from the circulation desk and used at the computers next to the reference desk), find the share of total household income (for the nation) accruing to each quintile for 2 transition countries of your choice, as well as the United States, Sweden, and one other OECD country.  For each of these five countries, find these income distribution statistics for two years: (1) latest available, and (2) one year in the early 1990s.   

Write down the statistics, making sure to indicate the year each number refers to and the units.  First, draw the Lorenz curves and calculate the Gini coefficients for each country and year (how do your values compare to the published value, if available?).  Second, compare the Gini coefficients across countries and over time discussing reasons for the differences.  Third, is the Gini coefficient a good measure of inequality -- what are its advantages and disadvantages?