how inequality in wages in the two different firms using Lorenz curve-
Wages - 50-70 70-90 90-110 110-130 130-150
No. of people in firm A - 20 15 20 25 35
No. of people in firm B - 150 100 90 110 50
pls show the whole process of the sum....(not only the graph but also how do we get the percentage ......)
Dear Student,
Solution :
Following table contents the calculation of percentage of workers also the calculation of wages ,
For the purpose of plotting the percentage point on the graph the % of cumm wages and % of workers of respective firms are used.
From the below mentioned Graph we can conclude that there is more inequality in wage distribution in Firm B, then in Firm A , because the lorenz curve of Firm B is far away from the line of equal distribution has compared to Firm A which is nearer to the line of equal distribution.
The more Far the lorenz curve from the line of equal distribution more is the inequality in wages.
Thanks ,
Solution :
Following table contents the calculation of percentage of workers also the calculation of wages ,
For the purpose of plotting the percentage point on the graph the % of cumm wages and % of workers of respective firms are used.
| Wages ( Rs) | MV (X) | Cummulative wages (C.W) | % of C.W | Firm A | Firm B | ||||
| No of Workers | cumm workers | % of workers | No of Workers | cumm workers | % of workers | ||||
| 50-70 | 60 | 60 | 60/500 = 12% | 20 | 20 | 20/100 = 20 % | 150 | 150 | 150/500 = 30% |
| 70-90 | 80 | 140 | 140/500 = 28% | 15 | 35 | 35/100 = 35% | 100 | 250 | 250/500 = 50 % |
| 90-110 | 100 | 240 | 240/500 = 48 % | 20 | 55 | 55/100 = 55% | 90 | 340 | 340/500 = 68 % |
| 110-130 | 120 | 360 | 360/500 = 72% | 25 | 80 | 80/100 = 80 % | 110 | 450 | 110/500 = 90% |
| 130-150 | 140 | 500 | 500/500 = 100% | 20 | 100 | 100/100 = 100 % | 50 | 500 | 500/500 = 100% |
| Total | 500 | 100 | 500 | ||||||
From the below mentioned Graph we can conclude that there is more inequality in wage distribution in Firm B, then in Firm A , because the lorenz curve of Firm B is far away from the line of equal distribution has compared to Firm A which is nearer to the line of equal distribution.
The more Far the lorenz curve from the line of equal distribution more is the inequality in wages.
Thanks ,