• There is a class difference between low income class and high income class in any society which has market system.
• It is called inequality of income distribution.

Types of inequality of Income distribution

• Relative distribution of income
• Absolute distribution of income

Lorenz Curve

• Nature of the relative income distribution can be illustrated by Lorenz curve.
  • The inequality of income distribution will be reduce a when the lorenz curve gets closer to the equal distribution curve.
  • The inequality of income distribution will be increase when the lorenz curve is faraway from equal distribution curve.

Gini Coefficient

• The amount of inequal distribution of income shown as lorenz curve can be measured by the Gini coefficient.
  • The inequality of income distribution increases when the Gini coefficient is closer to 1
  • The inequality of income distribution decreases when the Gini coefficient is closer to 0 (zero)
  • Gini coefficient is equal to 0 (zero) when there is no inequality of income