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Title: Suppose that men, ages 25-64, with earnings of $22,000 are at the 20th percentile of the earnings ... Post by: BrendanOO7 on Nov 14, 2017 Suppose that men, ages 25-64, with earnings of $22,000 are at the 20th percentile of the earnings distribution, while those with earnings of $84,000 are at the 80th percentile of the earnings distribution. Interpret these figures. What is the 80:20 earnings ratio? What does this ratio tell us?
Title: Re: Suppose that men, ages 25-64, with earnings of $22,000 are at the 20th percentile of the ... Post by: thanhtanrx789 on Nov 14, 2017 The figures given imply that 20 percent of men earn $22,000 or less and therefore that 80 percent of men earn more than $22,000. Likewise, 80 percent of men earn $84,000 or less, while, by implication, 20 percent of men earn more than $84,000. The 80:20 earnings ratio is $84,000/$22,000 = 3.82, which implies that earnings at the 80th percentile are almost 4 times as large as at the 20th percentile. The ratio indicates how far apart the two ends of the earnings distribution are. It is most useful when it can be compared to the 80:20 ratio over time. If the ratio is increasing over time, then inequality is increasing.
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