Poverty Line Income Distribution and Term Paper

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In other words, the number by which the bottom and middle thirds' incomes would need to be multiplied to reach those of the top one percent of earners in the country tripled, from ten to thirty in the case of the middle third (meaning the top one percent makes thirty times more, on average, than do the middle third of earners in the country) (CBPP 2010). As income gaps like this widen, more people are pushed towards the bottom fractions of the income distribution charts, and this can lead to a lowering of the poverty line in keeping with the proportions of the graph rather than with a true acknowledgement of the real cost of basic goods like food, utilities, clothing, and rent (Wolf 2009).

The Gini coefficient is another common calculation based on income distribution that can affect the poverty line. Graphing the line of income distribution with the percentage of a population earning a given amount (or less) along the x-axis and the income level on the y-axis produces a Lorenz curve, with a certain specific area beneath it (ThinkQuest 2005).

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A straight line running from the graph's centerpoint to the upper right corner at a 45 degree angle also produces a specific amount of area between this line and the Lorenz curve. Dividing this area by the area created by the Lorenz curve establishes the Gini coefficient, which is essentially a measure of income inequality -- the greater the coefficient, the wider the disparity in income and the more likely that a poverty line will include a larger proportion of the population unless it is moved downward......

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