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UNIVERSITY OF MANCHESTER
Econ 30041: Topics in Inequality and Poverty
Mock Exam Paper
Start Time: (UK time)
End Time: (UK time)
Answer all 5 questions from Section A and any 2 questions from Section B
Section A:
Each answer must be accompanied by a short explanation or demonstration of how
you arrived at your answer. Maximum of 150 words (not including graphs and
equations) for each question including subparts.
Section B:
The word count is a maximum of 500 words (excluding any diagrams and references).
Anything more will not be read. A word count must be provided at the end of the
answer.
Note: You have to submit typed responses. Your exam will not be accepted if it is
not typed. You can include images of algebra or graphs if you wish.
P.T.O
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SECTION A (50 marks): Answer all 5 questions.
1. The share of income for deciles in Mexico for year 2000 and 2010 is given in the
following table:
Source:http://www.cedlas.econo.unlp.edu.ar/wp/en/estadisticas/sedlac/
(i). Calculate the Kuznet’s ratio and the Palma ratio
(ii) Has Inequality in Mexico increased or decreased between 2000 and 2010
[10 marks]
2. Consider a society with 2 individuals with mean income ￡50. The income going to each
of the two individuals is 80 and 20 respectively.
(i) Using the small sample Gini, calculate the Gini coefficient.
(ii) Plot the Lorenz curve and calculate the Gini coefficient using the graph. Are the
Gini coefficients different and if so why
[10 marks]
3. .Consider a society Y with the following distribution: Y = (10, 20, 30, 40) which is
divided in to following two groups,
2000 2010
1.3 1.7
2.5 3.1
3.5 4.1
4.4 5.0
5.5 6.2
6.9 7.3
8.5 8.9
10.9 11.2
15.4 15.3
41.2 37.3
(i) A = (10, 40) and B = (20, 30). Using the Mean Log Deviation Inequality
measure find the between group and within group inequality.
(ii) A = (10, 30) and B = (20, 40). Using the Mean Log Deviation Inequality
measure find the between group and within group inequality.
[10 marks]
4. Consider the following income distribution
Income Frequency
10 10
20 20
50 20
70 10
100 5
(i) Find the relative poverty line based on 60 percent of the median income.
(ii) Calculate the head count ratio and poverty gap.
[10 marks]
5. Consider a society S with 10 individuals. Three of them work in the modern sector of
S and earn ￡2000 per month. The rest live in the traditional sector and earn only ￡1000
per month. One day, two new modern sector jobs open up and 2 individuals from the
traditional move to the modern sector
(i) Plot the Lorenz curve of the before and after the two modern sector jobs open
up. Using the Lorenz curve discuss what happens to the level of inequality.
(ii) Calculate the Gini coefficient of the two distributions. Which distribution has
higher inequality . Discuss your findings.
[10 marks]
SECTION B (50 marks): Answer any 2 questions. The maximum word count is 500
words (not including graphs) for each question. Please provide the word count at the
end of your answer.
1. Deaton and Case (2020) urges caution in using the Gini coefficient as a measure of
inequality. What do you think are the strengths and the weaknesses of their
arguments Are there alternative measures that would be preferable over the Gini to
measure inequality
[25 marks]
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2. Discuss how the international poverty lines are constructed. Would you classify the
international poverty lines as relative or absolute poverty lines Do you think the
poverty lines are adequate in capturing global poverty
[25 marks]
3. Grundler and Scheuermeyer (Journal of Macroeconomics, 2018, p.301) in Table 2
show that the impact of inequality on growth decreases as we control for more
variables. In fact, under specification (4) (final column) of the same Table, inequality
has no impact on growth. Is this evidence that inequality has negligible impact on
economic growth Explain.
[25 marks]
END OF EXAM
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