distribution of income (1 Viewer)

[ai3]

does anyone know what effects distribution of income (just income) have on:
1. unemployment
2. inflation

i know what u/e and inflation can do to each other, and what they can do to distribution of income, but i cant think of any issues for the other way round.

cheers

 

[Zarathustra]

1. If there are minimum wages the equilibrium point will be moved higher and so there will be higher unemployment. If wages are lowered there will be less unemployment but workers won't want to work below a limit - so in that way more unemployment will be produced. This will be similar for both high and low income earners - I think.

2. If low income earners incomes are increased there will be more upward pressure on inflation than higher income earners as the low income earners have higher m.p.s.