Consider two developing countries. Country A, though quite poor, uses government
ID: 1254012 • Letter: C
Question
Consider two developing countries. Country A, though quite poor, uses government resources and international aid to provide public access to quality education. Country B, though also quite poor, is unable to provide quality education for institutional reasons. The distribution of innate ability is identical in the two countries.a. Which country is likely to have a more positively skewed income distribution? Why? Plot the hypothetical income distributions for both countries on the same graph.
b. Which country is more likely to develop faster? Why? Plot the hypothetical income distributions in 20 years for both countries on the same graph.
Explanation / Answer
a. Country B will have more positively skewed income distribution than country A Since Education tries to equalize the income distribution among the citizens and hence the distribution is less skewed if quality education is provided. b. Country A is more likely to develope faster as due to quality education the income differences is low and hence the growth is faster. Income inequalities in the case of B result in retarded growth.