Using three different ways to measure inequality

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Reference no: EM131092922

Suppose that the wage distribution for a small town is as given here

Sector                   Number of Workers       Wage ($)

A                             50                                           $10 per hour

B                             25                                           $5 per hour

C                             25                                           $5 per hour

Assume that a minimum wage law is passed. It has no effect on the high wage sector A, but boosts wages to $7 per hour in sector B, while reducing employment to 20. Displaced workers from sector B move into the uncovered sector, C, where wages fall to $4.50 per hour. Has wage inequality risen or fallen? Explain, using three different ways to measure inequality.

Reference no: EM131092922

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