GS 29282 Fall 2021

Economics of Professor Bae

International Development

Assignment 3
(due 6:00pm, Nov. 29 (Monday))

1. The following income distribution data are for Haiti.

Quintile Percent Share

First quintile 2.5%
Second quintile 5.4%
Third quintile 10.2%
Fourth quintile 17.8%
Fifth quintile 64.1%

a. Carefully graph the Lorenz curve, labeling the axes.

b. Explain how to find the Gini coefficient, graphically.
c. Haiti’s national income is about $33 billion in 2020. What is the
approximate dollar income of the bottom 20%? Bottom 40%?
d. Haiti’s population is approximately 11 million. Suppose that each
household makes the average income for its quintile. What is the
level of poverty if the poverty line is $730 per capita?
e. Collect data on Haiti’s income inequality and poverty from the web
and see if this question explains the actual situation in the country
well.

2. Suppose that there are eight households (A, B, C, D, E, F , G, and H)

in a country. The country wants to calculate its MPI. The table below
shows a survey result from these six households:

1
 Indicator Weight A B C D E F G H
1
Health 1 6
0 1 0 1 0 1 1 0
1
Health 2 6
1 1 0 1 0 0 0 0
1
Education 1 6
1 0 0 1 0 0 1 0
1
Education 2 6
0 1 1 0 0 0 1 0
1
Standard of Living 1 18
0 0 0 1 1 0 0 0
1
Standard of Living 2 18
1 0 0 1 0 0 0 0
1
Standard of Living 3 18
0 0 0 0 1 1 1 1
1
Standard of Living 4 18
1 1 1 0 0 0 1 0
1
Standard of Living 5 18
1 0 0 0 1 0 1 0
1
Standard of Living 6 18
0 0 0 0 1 0 0 1

Calculate the MPI of the country.

3. There are a total of twenty citizens living in Country A. Thirteen are

farmers, each of whom earns $ 250 per year in income. Five (5) others are
small businessmen, each of whom earn $ 450 per year. The remaining two
residents own their factories, and makes $ 1,200 per year. This means
that the total income in the country is $ 7,900. Answer the following
questions:

a. Suppose that the country’s absolute poverty line, Yp , is $ 400. Cal-

culate TPG and P2 from the Foster-Greer-Thorbecke index.
b. Another country, Country B, also consists of twenty citizens. Thir-
teen are farmers, each of whom earns $ 300 per year in income. Five
(5) others are small businesswomen, each of whom earn $ 400 per
year. The remaining two residents own their factories, and makes $
1,000 per year. Suppose that the country has the same poverty line,
$ 400. Calculate TPG and P2 .
c. Discuss the differences and (or) similarities of these two countries.

4. Discuss both economic and non-economic characteristics of high-poverty

groups, in particular, women. Why do women and children in developing
countries experience the harshest deprivation?

Please note: Do not simply copy the characteristics from the lecture slide,
but explain them using your own words.