Global winners and losers of globalisation – Income Inequality

What does this image suggest about inequality within a country?

Global winners and losers of globalisation

The Lorenz Curve • Watch this video to understand what The Lorenz

Curve is all about

The Lorenz curve:The Lorenz curve represents income distribution. The line of equality shows what an equal distribution would look like, whereas he Lorenz curve shows the actual distribution.The greater the degree of the bow the greater the …………… ………………………………

Annotate your diagram to show x and y axis.

What is the Gini Coefficient:• Watch this next video to see what the Gini

Coefficient is …

What is the Gini Coefficient:• The Gini coefficient is a numerical value of

inequality in a country. • The Gini coefficient is a number between 0 and 1.• This is where 0 corresponds with perfect equality

(where everyone has the same income) and 1 corresponds with perfect inequality (where one person has all the income—and everyone else has zero income). • Have a look here at some of the countries data.

How to calculate the Gini Index:• The Gini Index is defined as a ratio of the areas on the Lorenz

Curve diagram. • If the area between the Line of Equality and the Lorenz curve

is A, and the area under the Lorenz curve in B, then the………• Gini Index = A ÷ (A + B). The higher the coefficient (number)

the more unequal the distribution of income will be.• The lower value would give a more balanced distribution of

income.

Area A

Area B

To find the area you count the complete graph squares and then the bisected squares and then add them together.

To check:

A + B is equal to half the graph

Your Turn:• Using the copy of

page 203 Numerical and Statistical Skills that you will find on Showbie, plot a Lorenz Curve for the world distribution of wealth in 2013.