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On the suitability of income inequality measures for regional analysis: Some evidence from simulation analysis and bootstrapping tests

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Author Info

  • Portnov, Boris A.
  • Felsenstein, Daniel

Abstract

The paper looks at the sensitivity of commonly used income inequality measures to changes in the ranking, size and number of regions into which a country is divided. During the analysis, several test distributions of populations and incomes are compared with a 'reference' distribution, characterized by an even distribution of population across regional subdivisions. Random permutation tests are also run to determine whether inequality measures commonly used in regional analysis produce meaningful estimates when applied to regions of different population size. The results show that only the population weighted coefficient of variation (Williamson's index) and population-weighted Gini coefficient may be considered sufficiently reliable inequality measures, when applied to countries with a small number of regions and with varying population sizes.

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Bibliographic Info

Article provided by Elsevier in its journal Socio-Economic Planning Sciences.

Volume (Year): 44 (2010)
Issue (Month): 4 (December)
Pages: 212-219

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Handle: RePEc:eee:soceps:v:44:y:2010:i:4:p:212-219

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Web page: http://www.elsevier.com/locate/seps

Related research

Keywords: Regions Inequality measures Bootstrapping Random permutation tests;

References

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  1. Sala-i-Martin, Xavier, 1994. "Regional Cohesion: Evidence and Theories of Regional Growth and Convergence," CEPR Discussion Papers 1075, C.E.P.R. Discussion Papers.
  2. Anthony Briant & Pierre-Philippe Combes & Miren Lafourcade, 2008. "Dots to boxes: Do the size and shape of spatial units jeopardize economic geography estimations?," PSE Working Papers halshs-00586029, HAL.
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  4. Doug Miller & A. Colin Cameron & Jonah B. Gelbach, 2006. "Bootstrap-Based Improvements for Inference with Clustered Errors," Working Papers 621, University of California, Davis, Department of Economics.
  5. Maximilian J. B. Hall & Karligash Kenjegalieva & Richard Simper, 2010. "Accounting for environmental factors, bias and negative numbers in efficiency estimation: A bootstrapping application to the Hong Kong banking sector," Discussion Paper Series 2010_03, Department of Economics, Loughborough University, revised Feb 2010.
  6. Silber, Jacques, 1989. "Factor Components, Population Subgroups and the Computation of the Gini Index of Inequality," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 107-15, February.
  7. Yitzhaki, Shlomo & Lerman, Robert I, 1991. "Income Stratification and Income Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 37(3), pages 313-29, September.
  8. Michael Beenstock & Daniel Felsenstein, 2007. "Mobility and Mean Reversion in the Dynamics of Regional Inequality," International Regional Science Review, , vol. 30(4), pages 335-361, October.
  9. C G Amrhein, 1995. "Searching for the elusive aggregation effect: evidence from statistical simulations," Environment and Planning A, Pion Ltd, London, vol. 27(1), pages 105-119, January.
  10. Kerstin Enflo & Per Hjertstrand, 2009. "Relative Sources of European Regional Productivity Convergence: A Bootstrap Frontier Approach," Regional Studies, Taylor & Francis Journals, vol. 43(5), pages 643-659.
  11. A S Fotheringham & D W S Wong, 1991. "The modifiable areal unit problem in multivariate statistical analysis," Environment and Planning A, Pion Ltd, London, vol. 23(7), pages 1025-1044, July.
  12. Yitzhaki, Shlomo, 1994. "Economic distance and overlapping of distributions," Journal of Econometrics, Elsevier, vol. 61(1), pages 147-159, March.
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Cited by:
  1. Stefano Magrini & Margherita Gerolimetto & Hasan Engin Duran, 2011. "Distortions in Cross-Sectional Convergence Analysis when the Aggregate Business Cycle is Incomplete," Working Papers 2011_07, Department of Economics, University of Venice "Ca' Foscari".

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