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Question

Difficulty: EasyPoverty Estimation, Inequality Metrics, and Inclusive Growth Strategies

Which of the following metrics specifically measures income inequality as the ratio of the income share of the richest 10% of the population to that of the poorest 40%?

  1. Palma ratioAnswer
  2. B
    Head Count Ratio
  3. C
    Gini coefficient
  4. D
    Capital-Output ratio

Answer

Palma ratio
The Palma ratio is defined explicitly as the ratio of the richest 10% of the population's share of gross national income to the poorest 40%'s share. It provides a focused metric for extreme income concentration.

Step-by-Step Solution

1
Identify the definition of inequality measurement ratios based on population percentile income shares.
The metric defined by comparing the top 10% income share against the bottom 40% income share is established by economist Gabriel Palma.
It highlights the structural divergence between high earners and low earners while ignoring the middle 50% whose income share tends to remain relatively stable across countries.

Key Concept

Palma ratio as an inequality metric
Estimated Time:45s
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Topics

Poverty Estimation, Inequality Metrics, and Inclusive Growth Strategies