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Estimating and Combining National Income Distributions using Limited Data

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Author Info
D.S. Prasada Rao
Duangkamon Chotikapanich
William E. Griffiths

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Abstract

Recently, there has been a resurgence of studies on the distribution of income and inequality at regional and global levels, largely driven by the concerns of economists, international development organisations and the general public about the overall effects of globalisation on growth and inequality. A major data problem encountered in these studies is the nature of income distribution data that are available mainly in a summary form that includes mean (average) income and income shares of quintile or decile groups of the population. Past studies have either ignored distributional characteristics within each population sub-group, implying that all individuals in a quintile or decile group have the same income, or used simple distributions like the lognormal or Pareto to model income distribution within each country. The aim of the paper is to estimate national and regional income distributions within a more general framework that relaxes the assumption of constant-income-within-groups and is based on a general and versatile class of income distributions. A technique to estimate parameters of a class of generalised Beta distributions using grouped data is proposed. Regional income distribution is modelled using a mixture of country-specific distributions and its properties are examined. The techniques are used to analyse national and regional inequality trends for eight East Asian countries and three benchmark years 1988, 1993 and 2000.

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Paper provided by Econometric Society in its series Econometric Society 2004 Australasian Meetings with number 213.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:ausm04:213

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Related research
Keywords: Income Distribution; Generalized Beta; Mixture of Distributions; Inequality;

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Find related papers by JEL classification:
C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Estimation
C16 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Econometric and Statistical Methods; Specific Distributions
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. McDonald, James B & Ransom, Michael R, 1979. "Functional Forms, Estimation Techniques and the Distribution of Income," Econometrica, Econometric Society, vol. 47(6), pages 1513-25, November. [Downloadable!] (restricted)
  2. Wilfling, Bernd, 1996. "Lorenz ordering of generalized beta-II income distributions," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 381-388. [Downloadable!] (restricted)
  3. McDonald, James B. & Xu, Yexiao J., 1995. "A generalization of the beta distribution with applications," Journal of Econometrics, Elsevier, vol. 69(2), pages 427-428, October. [Downloadable!] (restricted)
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  4. Quah, Danny, 2002. "One Third of the World's Growth and Inequality," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  5. Branko Milanovic, 2003. "The Ricardian Vice: Why Sala-i-Martin’s calculations of world income inequality are wrong," HEW 0305003, EconWPA. [Downloadable!]
  6. Steve Dowrick & Muhammad Akmal, 2005. "CONTRADICTORY TRENDS IN GLOBAL INCOME INEQUALITY: A TALE OF TWO BIASES ," Review of Income and Wealth, Blackwell Publishing, vol. 51(2), pages 201-229, 06. [Downloadable!] (restricted)
  7. Quah, Danny, 2002. "One Third of the World's Growth and Inequality," CEPR Discussion Papers 3316, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  8. McDonald, James B, 1984. "Some Generalized Functions for the Size Distribution of Income," Econometrica, Econometric Society, vol. 52(3), pages 647-63, May. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Chotikapanich, Duangkamon & Prasada Rao, D.S. & Tang, KamKi, 2006. "Estimating Income Inequality in China Using Grouped Data and the Generalized Beta Distribution," Working Papers RP2006/134, World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
    Other versions:
  2. Duangkamon Chotikapanich & William E Griffiths, 2008. "Estimating Income Distributions Using a Mixture of Gamma Densities," Department of Economics - Working Papers Series 1034, The University of Melbourne. [Downloadable!]
  3. Shorrocks, Anthony & Wan, Guanghua, 2008. "Ungrouping Income Distributions: Synthesising Samples for Inequality and Poverty Analysis," Working Papers RP2008/16, World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  4. Chotikapanich, Duangkamon & Prasada Rao, D.S. & Griffiths, William E. & Valencia, Vicar, 2007. "Global Inequality: Recent Evidence and Trends," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
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