ECON 120W Lecture Notes - Lecture 20: Price Controls, Marginal Product
20 Jun 2019
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Document Summary
Chapter 20 inequality: principle 1 tradeoff between efficiency and equity, market economies maximize efficiency, society getting the most it can from scarce resources, equity is not a feature of market economies, price control are inefficient. Labour markets, efficiency and equity: competitive labour markets, employees paid the value of their marginal product. Income from labour varies significantly: compensating differentials, education, experience, ability. Poverty rate: governments often set a poverty line, lico is the low-income-cutoff set by statistics canada. Measuring inequality of different types: assessing inequality if not trivial, there is no right measure of inequality, various forms of inequality can be considered and possibly measured. Income inequality: consumption inequality, wealth inequality, and inequality of opportunity, right measure depends on the issue in focus. In-kind transfers: transfers of goods, not money, obviously, there is more inequality if people report their income and transfers before accounting for tax, economic life-cycle, transitory/permanent income, wealth varies a lot over a lifetime, consumption varies even less.
