Chapter17: Income, Poverty, And Health Care
Section: Chapter Questions
Problem 8P
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Question
The following table shows income distribution data for 2015 and 2020 from the World Bank in Colombia and Dominican Republic respectively
Quintile | Colombia | Colombia | Dominican Republic | Dominican Republic |
2015 | 2020 | 2015 | 2020 | |
Lowest 20% | 3.8 | 2.8 | 5 | 6.2 |
Second 20% | 7.9 | 7.4 | 9.3 | 10.7 |
Third 20% | 12.5 | 11.9 | 13.8 | 14.9 |
Fourth 20% | 20 | 19.6 | 20.9 | 21.7 |
Highest 20% | 55.8 | 58.3 | 51 | 46.5 |
1. Consider a 12-person economy where the individuals are employed equally across the
sectors. If the modern urban wage = £8, the informal urban wage = £3, and the tradition
rural income = £1, what is the squared poverty gap index (P2) given that the poverty line
= £1.25? Suppose that rural income now rises to £2, other things being equal, how would
you characterise and show this type of growth?
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