Lorentz curve

The Lorentz curve is a model that shows how the income is distributed in a country. The Lorentz curve is plotted on a graph with two axes.

The vertical axis has the label 'cumulative percentage of income' and the horizontal axis has the label 'cumulative proportion of households'. A Lorentz curve with a slope of 45 degrees that goes from one corner to the other indicates a completely equal distribution of income in the country. A Lorentz curve that goes along the axes to the left indicates a complete income inequality in the country, one person with all the income in the country.

A Lorentz curve can be plotted for different countries so that you can compare the distribution of income between different countries. Developing countries usually have a much more unequal distribution of income compared compared to a developed country.