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Question
NARRBEGIN: SA_82_84Economists believe that countries with more income inequality have lower unemployment rates. An economist in 1996 developed the Table below which contains the following information for ten countries during the 1980-1995 time period:
The change from 1980 to 1995 in ratio of the average wage of the top 10% of all wage earners to the median wage
The change from 1980 to 1995 in unemployment rate.
Income inequality vs. Unemployment rate
| Country | WIR Change | UR Change | |
| Germany | -6.0% | 6.0% | |
| France | -3.5% | 5.6% | |
| Italy | 1.0% | 5.2% | |
| Japan | 0.0% | 0.6% | |
| Australia | 5.0% | 2.4% | |
| Sweden | 4.0% | 5.9% | |
| Canada | 5.5% | 2.0% | |
| New Zealand | 9.5% | 4.0% | |
| Britain | 15.6% | 2.5% | |
| U.S. | 15.8% | -1.8% |
Explain why the ratio of the average wage of the top 10% of all wage earners to the median measures income inequality.
Answer
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