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Money Wealth Life Insurance Pdf – The Gini index, or Gini coefficient, measures the distribution of income in a population. Developed by the Italian statistician Corrado Gini in 1912, it is often used as a measure of economic inequality, a measure of income distribution or, less commonly, the distribution of wealth between population.

The coefficient ranges from 0 (or 0%) to 1 (or 100%), where 0 represents perfect equality and 1 represents perfect inequality. Values ​​greater than 1 may result from negative income or assets.

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A country where all residents have the same income gets a Gini coefficient of 0. Conversely, a country where one resident gets all the income and the rest get nothing, gets Gini income coefficient 1 .

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A similar analysis can be applied to the distribution of wealth (the gini coefficient of wealth), but since wealth is more difficult to measure than income, the gini coefficient usually refers to income and is expressed as such as gini coefficient or gini coefficient. , no definition or . they indicate income Gini Wealth is much higher than income.

Even in rich countries, the Gini index measures income rather than the value of money, so most of the country’s wealth may still be concentrated in the hands of the poor. little, even if the distribution of income is the same.

The Gini coefficient is an important tool for analyzing the distribution of income or wealth in a country or region, but it should not be taken as an absolute measure of income or wealth. A country with a high income and a country with a low income can have the same Gini coefficient, if the income of each country is distributed equally. For example, Turkey and the United States both have an income Gini of about 0.39-0.40, according to the Organization for Economic Co-operation and Development (OECD), although lower not the gross domestic product (GDP) per person.

The Gini index is often graphically represented by the Lorenz curve, as shown below, which shows the distribution of income (or wealth) by plotting the percentage of population with income on the horizontal axis and aggregate income on the vertical axis. The Gini coefficient is equal to the area under the line of perfect equality (0.5 by definition) minus the area under the Lorenz curve divided by the area under the line of perfect equality. In other words, it doubles the area between the Lorenz curve and the perfect parallel line.

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The gini coefficient experienced a steady increase in the 19th and 20th centuries. In 1820 the global gini was 0.50, while in 1980 and 1992 it was 0.657.

COVID-19 may have other negative effects on income equality. According to the report of the World Bank, the Gini ratio has increased by about 1.5 points in the five years after major epidemics, such as Ebola and Zika. Economists believe that COVID-19 will increase the Gini coefficient by 1.2 to 1.9 percent for 2020 and 2021.

Below are the individual Gini rates of income, provided by the US Central Intelligence Agency (CIA) World Factbook:

Some of the world’s poorest countries have some of the highest Gini coefficients in the world, while most of the lowest Gini coefficients are found in rich European countries. However, the relationship between income inequality and GDP per capita is not a perfect negative relationship and the relationship varies over time.

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Michail Moatsos of the University of Utrecht and Joery Baten of the University of Tübingen show that from 1820 to 1929, inequality rose slightly – and then fell – while GDP. From 1950 to 1970, inequality declined as GDP per capita rose above a certain threshold. From 1980 to 2000, inequality decreased along with GDP per capita, then declined rapidly.

Relationship between Gini coefficient and GDP per capita in three time periods. Source: Mikhail Moatsos and Joery Baten.

The accuracy of the metric depends on reliable data on GDP and income. Shadow economy and illegal economic activities exist in every country. Informal economic activity generally accounts for a large share of real economic output in developing countries and at the bottom of the income distribution there. in the country. In that case, it means that the Gini index of measured income will estimate true inequality. It is more difficult to obtain accurate data on wealth due to the reputation of shelters.

Another drawback is that very different income distributions can lead to similar Gini coefficients. Because Gini tries to reduce the two-dimensional area (the distance between the Lorenz curve and the parallel line) to a single number, it hides information about the shape of the inequality. In everyday terms, this would be like defining the content of an image by just one border length, or a simple brightness value in pixels.

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In addition, although the use of the Lorenz curve may provide more information, it fails to capture the demographic variation between subgroups in the distribution, such as the distribution of income by age, tribe, or social group. In this regard, understanding demographics can be important in understanding what the Gini coefficient represents. For example, a large retired population leads to a higher Gini.

South Africa, with a Gini coefficient of 63.0, is recognized as the country with the highest income inequality. The World Population Review attributes this huge disparity to discrimination based on race, gender and geography, with whites and urban workers in South Africa earning good wages. more than others.

The Gini index ranges from 0% to 100%, where 0 represents perfect equality and 100 represents perfect inequality. The Gini 50 marks the halfway point and can generally be seen as the point where income is not fairly distributed. Only 15 countries in the world have a Gini of 50 or more.

The United States has a Gini coefficient of 41.1, which is a great value for such a developed economy. Economists blame the rise in income inequality in the United States on factors such as technological change, globalization, union busting and the decline in the value of final wages. bottom.

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As the gap between the rich and the poor continues to widen, measuring the income gap may become more important. And the Gini index can be a good starting point when measuring such income inequality. Knowing the Gini index number is not a panacea, but this process provides a way to identify and monitor the direction of society, which can open the door to dialogue and possible solutions.

However, keep in mind that there are limitations to using this process. The coefficient is reliable if the data used in the calculation, and gives the same number of readings, instead of calculating different groups in the sample.

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Money laundering is the illegal process of concealing the origin of money obtained from illegal activities such as drug trafficking, bribery, embezzlement or gambling by turning it into a legitimate source. It is a crime in many jurisdictions with different definitions. It is often an organized criminal activity.

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In US law, money laundering is the practice of financial transactions to conceal the identity, source, or destination of illegally obtained funds. In English law, the definition of common law is much broader. The activity is defined as “any activity involving property that is fully or partially the proceeds of crime that conceals the fact that the property is the result of crime or conceals the official ownership of the property as such”.

In the past, the term “money laundering” applied only to financial transactions related to organized crime. Today, the definition is often expanded by governments and international regulators, such as the US Office of the Currcy Comptroller, to refer to “financial transactions that generate assets or value as a result of illegal activities.” “, which may include activities such as tax evasion or false accounts. In the UK, it’s not necessarily about money, it’s about economic benefits. The courts hold, among other things, money laundering by individuals, drug dealers, companies, corrupt government officials, members of criminal organizations such as the mafia and the government, etc.

As financial crime has become more complex and financial intelligence has become more recognized in the fight against international crime and terrorism, money laundering has become more important to political, economic and legal debates. Money laundering is ipso facto illegal; the production of money is almost always criminal in some way (because no, money does not have to be clean).

Anti-money laundering laws were created to combat organized crime during Prohibition in the United States in the 1930s. Organized crime received a major boost from Prohibition and a great source of new resources.

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