The explanation for the crossing in Figure 5.9 is as follows: The poor who remain in the traditional sector have their incomes unchanged, but these incomes are now a smaller fraction of the larger total, so the new Lorenz curve,
L2, lies below the old Lorenz curve, L1, at the lower end of the income distribution scale. Each modern-sector worker receives the same absolute income as before, but now the share received by the richest income group is smaller, so
the new Lorenz curve lies above the old one at the higher end of the income distribution scale. Therefore, somewhere in the middle of the distribution, the old and new Lorenz curves must cross.18