Econ 30041: Topics in Inequality and Poverty
Mock Exam Paper
Answer all 4 questions from Section A and any 1 question from Section B
Section A:
Each answer must be accompanied by a short explanation or demonstration of how you arrived at your answer. Maximum of 150 words (excluding graphs and equations) for each question including subparts.
Section B:
The word count is a maximum of 500 words (excluding any diagrams and references). Anything more will not be read. A word count must be provided at the end of the answer.
Note: You have to submit typed responses. Your exam will not be accepted if it is not typed. You can include images of algebra or graphs if you wish.
SECTION A (60 marks): Answer all 4 questions.
1. The share of income for deciles in Mexico for year 2000 and 2010 is given in the following table:
|
2000
|
2010
|
|
1.3
|
1.7
|
|
2.5
|
3.1
|
|
3.5
|
4.1
|
|
4.4
|
5.0
|
|
5.5
|
6.2
|
|
6.9
|
7.3
|
|
8.5
|
8.9
|
|
10.9
|
11.2
|
|
15.4
|
15.3
|
|
41.2
|
37.3
|
Source:http://www.cedlas.econo.unlp.edu.ar/wp/en/estadisticas/sedlac/
(i). Calculate the Kuznet’s ratio and the Palma ratio?
(ii) Has Inequality in Mexico increased or decreased between 2000 and 2010? [15 marks]
2. Consider a society with 2 individuals with mean income £50. The income going to each of the two individuals is 80 and 20 respectively.
(i) Using the small sample Gini, calculate the Gini coefficient.
(ii) Plot the Lorenz curve and calculate the Gini coefficient using the graph. Are the Gini coefficients different and if so why? [15 marks]
3. .Consider a society Y with the following distribution: Y = (10, 20, 30, 40) which is divided in to following two groups,
(i) A = (10, 40) and B = (20, 30). Using the Mean Log Deviation Inequality measure find the between group and within group inequality.
(ii) A = (10, 30) and B = (20, 40). Using the Mean Log Deviation Inequality measure find the between group and within group inequality. [15 marks]
4. Consider the following income distribution
|
Income
|
Frequency
|
|
10
|
10
|
|
20
|
20
|
|
50
|
20
|
|
70
|
10
|
|
100
|
5
|
(i) Find the relative poverty line based on 60 percent of the median income.
(ii) Calculate the head count ratio and poverty gap. [15 marks]
SECTION B (40 marks): Answer any 1 question. The maximum word count is 500 words (not including graphs) for each question. Please provide the word count at the end of your answer.
1. Deaton and Case (2020) urges caution in using the Gini coefficient as a measure of inequality.
a. What do you think are the strengths and the weaknesses of their arguments?
b. Are there alternative measures that would be preferable over the Gini to measure inequality and if so why? [40 marks]
2. Grundler and Scheuermeyer (Journal of Macroeconomics, 2018, p.301) in Table 2 show that the impact of inequality and other factors on economic growth.
a. Interpret the impact of inequality and redistribution on economic growth in Column 1a of Table 2.
b. Discuss, why with additional controls, the impact of inequality on economic growth reduces. [40 marks]