Income Distribution Issues in Thailand

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Income Distribution Issues in Thailand

• Professor Medhi Krongkaew
• NACC Commissioner

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Income Distribution
Income inequality as relative poverty Theory of
income distribution, sources and causes of income
inequality Various measures of income distribution
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Absolute vs. Relative Poverty
Absolute poverty is measured by poverty line,
whereas relative poverty is measured by the
distribution of income of the people, ie. how
much income position of an individual deviates
from the mean income of the group, community,
region, or country. It is possible to have a
situation where the distribution of income is
completely equal and all are under poverty.
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Lorenz Curve and Gini Ratio
Lorenz curve shows the distribution of income of
a group of people where the number of people is
cumulatively staggered from poorest to richest,
from 0 to 100 , and plotted on the horizontal
axis of a unit square, and the cumulative income
of these people is plotted on the vertical axis.
The curve that joins all these coordinates is
called the Lorenz Curve.
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• ????????????????????????????????????????.
•  
• (1)     ???? Lorenz
• ????????????? (100)
• ?????????????? (100)
•  
•  
•  
•  
•  
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A
B
0
0
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Lorenz Curve
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• ???????????????????????????????????????? (???)
•  
• (2)     ???????????????? (Gini coefficient)
• G A
• AB
• (3)     ????????????/???? (T/B ratio)
• TBR ?????????????? 20
  ????????????
• ?????????????? 20
  ???????????

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Gini Ratio or Gini Coefficient
Measures income distribution as a ratio of area
under the Lorenz curve and the triangle under the
diagonal line of perfect equality. G A/(AB) G
0 means perfectly equal income distribution G
1 means perfectly unequal income distribution
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• ???????????????????????????????????????? (???)
•  
• (2)     ???????????????? (Gini coefficient)
• G A
• AB
• (3)     ????????????/???? (T/B ratio)
• TBR ?????????????? 20
  ????????????
• ?????????????? 20
  ???????????

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T/B Ratio
If all people are lined up from poorest to
richest, or lowest to highest income group, the
ratio of total income of the top group (richest)
to the bottom group (poorest) or T/B Ratio would
signify how serious inequality of income is. If
the population is divided in to 5 equal groups
(quintile), T/B ratio is the ratio of Q5/Q1 where
Q5 and Q1 are richest and poorest quintiles,
respectively
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Marginal Productivity Theory of Distribution
If all factors in a competitive market are paid
their values of marginal products, then total
resources are just exhausted and distributed
fairly to all factors of production. The returns
to each factor is determined by how much it has
put in the total national production or income.
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The Kuznets Hypothesis
Simon Kuznets concludes from his studies of the
relationship between economic growth and income
distribution that in the early stage of economic
development when the national income is growing,
the distribution of income will worsen first but
will later improve as the economy has grown past
a certain level.
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The Inverted U-Shaped Kuznets Curve

Index of Inequality
Kuznets Curve
Income
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