Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 6 The Economics of Labor MarketsChapter 20 of 36 Income Inequality and Poverty
Section 2 of 21
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A person's earnings depends on the supply and demand for that person's labor.
This in turn depends on factors including natural ability, human capital, compensating differentials, discrimination, and chance.
Labor earnings are about three-fourths of total income in the U.S. economy.
Therefore, the factors that determine wages are also largely responsible for determining how the economy's total income is distributed among the members of society.
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Restated from Chapter 1, the ten principles of economics:
1: people face trade-offs
2: the cost of something is what you give up to get it
3: people think at the margin
4: people respond to incentives
5: trade can make everyone better off
6: markets are usually a good way to organize economic activity
7: governments can sometimes improve market outcomes
8: a country's standard of living depends on its ability to produce goods and services
9: prices rise when the government issues too much money
10: society faces a short-run trade-off between inflation and unemployment
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One of the ten principles, #7: governments can sometimes improve market outcomes.
The invisible hand of the marketplace acts to allocate resources efficiently but it does not necessarily allocate resources fairly.
Many economists believe government should redistribute income to achieve greater equality.
Another of the ten principles, #1: people face trade-offs.
When government sets policies to make the distribution of income more equal it distorts incentives and alters behavior making the allocation of resources less efficient which reduces the total amount of wealth created.
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In the sections that follow there will be three steps in the discussion of income distribution:
· assess the extent of inequality in society
· consider different views about what government should do to alter income distribution
· evaluate various public policies aimed at alleviating poverty
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evaluate various policies
samazama na seisaku o hyōka suru
さまざまな政策を評価する
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