Question

What Are the five income classes in Distribution of income? Describe each of them.

Why income distribution in more developed countries is less unequal? How do you measure that?

Answer 1

Five income classes are

1) High income - These are group in which income per capita is $12536 or more

2) Upper middle - These are classified between income per capita of $3996 - $12535

3) Lower middle - These are classified between income per capita of $1025 - $3995

4) Poor - These are classified between income per capita of 1025 or less

5) Below poverty line- These are who cannot even afford basic necessities of life.

Income in developed countries is less unequal because they have

1) High literacy rate

2) Less unemployment

3) Better skills and training

4) More ownership of financial assets

A simple but effective way to examine income inequality is to calculate decile ratios.