Macro Foundations · intro
What moves on the Lorenz Curve & Gini Coefficient diagram
Progressive taxes and transfers raise the cumulative income share at every point below the top, moving the Lorenz curve toward equality and lowering the Gini coefficient.
Before the reform, the market distribution of income sags well below the equality line.
Progressive taxes take proportionally more from top incomes; transfers top up the bottom.
The after-tax Lorenz curve pulls back toward the 45-degree line: the bottom 60% now hold a visibly larger share.
This before-and-after pair is the standard exam comparison: same economy, two Lorenz curves, lower Gini.
Examiners ask this as: progressive tax, redistribution, welfare payments, transfers, tax the rich.
Other scenarios on Lorenz Curve & Gini Coefficient