Question

True or False

In the National Hockey League (NHL), the maximum contract a player can sign is $15.9 million per year while the minimum contract is $650,000 per year. The NHL Player's Union is concerned about players at the bottom of the earnings distribution and negotiates to raise the minimum contract to $1 million per year in a new collective bargaining agreement. This is likely to increase the Gini Coefficient within the NHL.

Answer 1

Gini coefficient measures the income distribution of people in economy where lower Gini coefficient measures lower income inequality while higher Gini coefficient shows higher income inequality.

A rise in minimum contract to $1 million from $0.65 million will raise income of lower income group of NHL players while higher income group would not be affected from this which reduce income inequality between higher quintile and lowest quintile population. Thus, it will surely reduce Gini coefficient which make this statement wrong.