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Reference distributions and inequality measurement

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Author Info

  • Frank Cowell
  • Emmanuel Flachaire

    ()

  • Sanghamitra Bandyopadhyay

Abstract

We investigate a general problem of comparing pairs of distributions which includes approaches to inequality measurement, the evaluation of “unfair” income inequality, evaluation of inequality relative to norm incomes, and goodness of fit. We show how to represent the generic problem simply using (1) a class of divergence measures derived from a parsimonious set of axioms and (2) alternative types of “reference distributions.” The problems of appropriate statistical implementation are discussed and empirical illustrations of the technique are provided using a variety of reference distributions. Copyright Springer Science+Business Media New York 2013

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File URL: http://hdl.handle.net/10.1007/s10888-012-9238-z
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Bibliographic Info

Article provided by Springer in its journal The Journal of Economic Inequality.

Volume (Year): 11 (2013)
Issue (Month): 4 (December)
Pages: 421-437

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Handle: RePEc:kap:jecinq:v:11:y:2013:i:4:p:421-437

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Web page: http://springerlink.metapress.com/link.asp?id=111137

Related research

Keywords: Divergence measures; Generalised entropy measures; Income distribution; Inequality measurement; D63; C10;

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References

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  1. Cowell, Frank A., 1980. "Generalized entropy and the measurement of distributional change," European Economic Review, Elsevier, vol. 13(1), pages 147-159, January.
  2. Cowell, Frank A. & Flachaire, Emmanuel, 2007. "Income distribution and inequality measurement: The problem of extreme values," Journal of Econometrics, Elsevier, vol. 141(2), pages 1044-1072, December.
  3. Wertz, Kenneth L, 1979. "The Measurement of Inequality: Comment," American Economic Review, American Economic Association, vol. 69(4), pages 670-72, September.
  4. Schluter, Christian & van Garderen, Kees Jan, 2009. "Edgeworth expansions and normalizing transforms for inequality measures," Journal of Econometrics, Elsevier, vol. 150(1), pages 16-29, May.
  5. Kurt Devooght, 2008. "To Each the Same and to Each his Own: A Proposal to Measure Responsibility-Sensitive Income Inequality," Economica, London School of Economics and Political Science, vol. 75(298), pages 280-295, 05.
  6. Frank Cowell & Emmanuel Flachaire & Sanghamitra Bandyopadhyay, 2009. "Goodness-of-fit: an economic approach," LSE Research Online Documents on Economics 25433, London School of Economics and Political Science, LSE Library.
  7. Davidson, Russell & Flachaire, Emmanuel, 2007. "Asymptotic and bootstrap inference for inequality and poverty measures," Journal of Econometrics, Elsevier, vol. 141(1), pages 141-166, November.
  8. Davidson, Russell & MacKinnon, James G., 2007. "Improving the reliability of bootstrap tests with the fast double bootstrap," Computational Statistics & Data Analysis, Elsevier, vol. 51(7), pages 3259-3281, April.
  9. repec:hal:journl:halshs-00175929 is not listed on IDEAS
  10. Brice Magdalou & Richard Nock, 2010. "Income Distributions and Decomposable Divergence Measures," Documents de Travail 2010-01, CEREGMIA, Université des Antilles et de la Guyane.
  11. Christian Schluter, 2012. "On the problem of inference for inequality measures for heavy‐tailed distributions," Econometrics Journal, Royal Economic Society, vol. 15(1), pages 125-153, 02.
  12. Almås, Ingvild & Cappelen, Alexander W. & Lind, Jo Thori & Sørensen, Erik Ø. & Tungodden, Bertil, 2011. "Measuring unfair (in)equality," Journal of Public Economics, Elsevier, vol. 95(7), pages 488-499.
  13. Jenkins, S. & O'Higgins, M., 1988. "Inequality Measurement Using 'Norm Incomes': Were Garvey And Paglin Onto Something After All?," Papers 174, Australian National University - Department of Economics.
  14. Paglin, Morton, 1975. "The Measurement and Trend of Inequality: A Basic Revision," American Economic Review, American Economic Association, vol. 65(4), pages 598-609, September.
  15. Russell Davidson, 2012. "Statistical inference in the presence of heavy tails," Econometrics Journal, Royal Economic Society, vol. 15(1), pages C31-C53, 02.
  16. Ebert, Udo, 1984. "Measures of distance between income distributions," Journal of Economic Theory, Elsevier, vol. 32(2), pages 266-274, April.
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