Question

Between 1968 and 2011 , the percentage share of total income grew for __________(LO1,3) a) lowest two quintiles b) the middle three quintiles c) the highest quintile d) the highest quintile and the lowest quintile

Short answer

In this case, without the actual data set to analyze, we are unable to determine the correct answer. Please consult the relevant data on income distribution to verify which option might be correct.

Step-by-step solution

Understand the quintiles

Quintiles are a way of dividing a data set into five equal parts. In the context of this exercise, we are looking at how the percentage share of total income has changed across different quintiles.

Analyze the growth of the lowest two quintiles

This option indicates that the growth in the percentage share of total income was experienced by the lowest two quintiles. To verify this statement, you would need to look at the data on income distribution between 1968 and 2011. If the percentage share of these two quintiles increased, then this would be the correct answer.

Analyze the growth of the middle three quintiles

In this option, the growth in the percentage share of total income is observed in the middle three quintiles. As with step 2, you would need to analyze data on income distribution for 1968 and 2011 to see if the percentage shares for these three quintiles have increased or not.

Analyze the growth of the highest quintile

This option suggests that the growth occurred in the highest quintile. Once again, you need to verify this from the income distribution data from 1968 and 2011. If the percentage share of the highest quintile increased significantly during this time, it could indicate that this is the correct answer.

Analyze the growth of the highest quintile and the lowest quintile

The last option indicates that both the highest and the lowest quintile saw growth in their percentage share of total income. To confirm this option, you would need to examine the data on income distribution and check if the percentage shares of both the highest and lowest quintiles have increased.

Comparing and selecting the correct answer

After analyzing the growth for each quintile group, you will need to compare the results of each option and determine which one is correct. The correct answer should be the quintile group(s) that have experienced growth in their percentage share of total income between 1968 and 2011. In this case, without the actual data set to analyze, we are unable to determine the correct answer. Please consult the relevant data on income distribution to verify which option might be correct.

Key concepts

Quintiles

When discussing topics like income distribution, the concept of quintiles plays an important role. Quintiles divide a dataset into five equal parts. Each quintile represents 20% of the population, ranked according to the attribute being measured, such as income. This allows for a detailed analysis of how income is distributed across the population.
To visualize quintiles, consider the example of five equally-sized groups of people sorted by their yearly income:

• The lowest quintile includes the bottom 20% of earners.
• The second quintile includes the next 20%, and so on.
• The highest quintile represents the top 20% of earners.

For income distribution, examining which quintiles have seen growth or decline over a period aids in understanding changes in economic equality.
By observing the shifts in income share between quintiles, we can gauge broader economic trends and inequalities.
In any given period, an increase in income share of a specific quintile signals that that group's economic status has improved relative to others.

Economic Inequality

Economic inequality refers to the extent to which income is distributed unevenly among a population. It is a crucial metric for understanding social and economic health in any society. Economic inequality manifests in different ways:

• Income disparity between the rich and the poor.
• Unequal access to education, housing, and healthcare.

A high degree of economic inequality is often seen as problematic. It can lead to social unrest, decrease in average health outcomes, and lower economic mobility among citizens.
Analyzing income share changes across quintiles helps us understand economic inequality. For instance, if a higher percentage of total income shifts to the highest quintile, it suggests that inequality has increased, as the richest groups are gaining more financial resources compared to others.
Addressing economic inequality often involves policy interventions to redistribute income and provide equal opportunities for all socioeconomic groups.

Income Growth

Income growth refers to the increase in the amount of money earned by individuals or households over time. It generally leads to improved living standards and economic prosperity. However, how income growth is distributed among different quintile groups is vitally important for economic equity.
If income grows more quickly in the higher quintiles, it indicates that wealthier groups are gaining more compared to those in lower quintiles. This can exacerbate existing economic inequality. Conversely, equitable income growth across quintiles can lead to a more balanced and fair economic landscape.

• Growth focused on lower quintiles can alleviate poverty and bolster overall economic stability.
• Growth predominantly in the highest quintiles may result in greater income inequality.

Income policies aiming for balanced growth strive to ensure that all quintile groups benefit proportionately from economic progress. This can involve supporting lower-income groups through education, tax benefits, or economic initiatives that boost their earning potential.