Problem 2 (60 marks) The figure shows Lorenz curves before and after automation (the solid and dashed line, respectively

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Problem 2 60 Marks The Figure Shows Lorenz Curves Before And After Automation The Solid And Dashed Line Respectively 1 (102.98 KiB) Viewed 52 times

Problem 2 (60 marks) The figure shows Lorenz curves before and after automation (the solid and dashed line, respectively). Prior to automation there are 90 workers who receive a total of 60% of the economy's income. Of these 90 workers, 60 have skills which are substitutes for those of the new robots, while 30 have skills which are complementary to the robots. There are 5 owners who earn 40% of the economy's income, and 5 workers who are unemployed. The total income of the economy increases by 10% due to automation. Initial Gini coefficient: 0.38 Post polarization Gini: 0.53 100 60 Cumulative share of income (%) 25 Effect of robots 0 5 10 65 95 100 Y Skills Skills Unemployed Owners of substitutable by complementary robots robots to robots Cumulative share of the population from lowest to highest income %) (a) What is each employed worker's income before and after automation, expressed as a share of total income. (20 marks) (b) What was the increase in absolute income for each group of workers and owners of robots before and after automation? (20 marks) (c) What happened to the overall inequality in this economy and why? (20 marks)