Question

Compare answer A and B and give comment on any change occurred between year 2005 to 2015.

A) Ratio of GDP per capita (Middle to high wages) -2005 year.

i. 3980/38293=0.1039*100=10.4%

ii. Ratio of GDP per capita (low to high wages)

507/ 38293=0.013*100=1.3%

             iii. Ratio of GDP per capita (low to middle wage)

507/3980=0.127*100=12.7%

B) i. Ratio of GDP per capita (Middle to high wages)- 2015 year

154192.5/77024.76 = 2.00 *100= 200%

ii. Ratio of GDP per capita (low to high wages)

I 5085.24/77024.76 = 0.066 *100 =6.6%

iii. Ratio of GDP per capita (low to middle wages)

5085.24/154192.5 = 0.033 *100=3.3%

Answer 1

i)Comparing the ratio of Middle to High wages between 2005 and 2015

Adjusting for inflation between these 10 years, we can clearly see that both the middle and high wages have increased within this time period. But one thing to notice is that the ratio has increased dramatically from 2005 to 2015 indicating that the numerator of the ratio/fraction, which is the middle wages have increased more than the higher wages. As evident from the calculation, the middle wages have increased nearly 50 times and the higher wages have only increased a little more than a double thereby causing the ratio to actually increase in the given time period.

Possible reasons behind significant increase in middle wages:-

• Possible improvements of the skill level of the middle wage workers in 10 years.
• Higher educational qualifications of the middle wages workers and further specialized professional trainings obtained by them.
• Growth of various informal sectors and other service sector jobs thereby generating higher demand for middle wage workers compared to high paid jobs such as managerial positions, CEOs, company directors and so forth.
• Higher workforce participation of middle wage workers compared to their higher paid counterparts.

ii)Comparing the ratio of low to high wages between 2005 and 2015

Similarly, the ratio of low and high wages has also increased but not as much as the ratio of middle to high wages in 10 years.As reflected by the calculation, the low wages have increased by almost 10 times and high wages by little more than double. Therefore, lower wages have increased within the goven time period and consequently the ratio has also increased but not as much as the increase in middle wages(50 times) and the ratio between middle and high wages.

Possible reasons behind increase in lower wages:-

• Growth of menial and low skilled jobs with relatively lower skill and educational requirements.
• Expansion of industrial production therey creating higher demands for low paid industrial labourers.
• Growth of informal sectors such IT and other technical fields where more technical and administrative workers are needed.

iii)Comparing ratio of low to middle wages from 2005 to 2015

A close observation would reveal and as already stated that the rate of increase in middle wages(50 times) is significantly higher than the increase in low wages(10 times). Therefore, as can be observed from the calculation, the ratio between low and middle wage has actually decreased in 10 years. Notice that the denominator has increased much more than the numerator in 10 years. It somehow indicates that the demand for middle wage workers has increased more steadily than the low wage workers or the employment opportunities for middle wage workers have expanded more rapidly than those for low wage workers.

Special Note: It has been considered that these calculations have been adjusted for inflation as certainly the monetary value has changed in 10 years period.