Answer to Question #225579 in Economics for Viot

Question

ExplainDualistic development and shifting Lorenz curves - some stylized typologies

Answer 1

A Lorenz curve is a graphical representation of income inequality or wealth inequality developed by American economist Max Lorenz in 1905. The graph plots percentiles of the population on the horizontal axis according to income or wealth.

The dual economy is represented through a fully-specified general equilibrium model. Conditions for particular shifts in the Lorenz curve mostly involve the income and price elasticities of demand faced by the traditional sector of the economy, and suggest that an unambiguous drop in income inequality is somewhat unlikely at the dual stage of development.