ECON BC 2075y Lecture 18: Lecture 18 Notes
1 Dec 2016
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Inequality and growth- inverted u hypothesis, theory and evidence. Distinction between personal and functional distributions . How economic inequalities are created in a society- need to understand how factors of production are paid and owned . Need to agree on properties a desirable inequality index should satisfy- depend on our normative beliefs about inequality. Personal distribution (or: the size distribution of income") relates to individual persons and their incomes. The way in which that income was acquired often remains in the background. What matters is how much someone earns, not so much whether that income consists of wage, interest, profit, pension or whatever. And further special attention is paid to income recipients as a collective body, in which regular patterns are sought. Functional distribution or factor share distribution" explains the share of total national income received by each factor of production. In other words, it relates to the distribution of rewards for the services of the factors of production.
