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A Note on the Interpretation and Application of the Gini Coefficient

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  • Kwang Soo Cheong

    (Department of Economics, University of Hawaii at Manoa)

Abstract

We show that the Gini coefficient is a simple linear transformation of the center of gravity of income distribution. The new derivation and inequality decomposition methods are applied to income data for Korea in order to analyze the distributional impact of the recent economic crisis. We also discuss the potential benefits of using additional higher moments of the relative income rankings.

Suggested Citation

  • Kwang Soo Cheong, 1999. "A Note on the Interpretation and Application of the Gini Coefficient," Working Papers 199901, University of Hawaii at Manoa, Department of Economics.
    • Handle: RePEc:hai:wpaper:199901
    as

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    File URL: http://www.economics.hawaii.edu/research/workingpapers/991.pdf
    File Function: First version, 1999
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    References listed on IDEAS

    as
    1. Sheshinski, Eytan, 1972. "Relation between a social welfare function and the gini index of income inequality," Journal of Economic Theory, Elsevier, vol. 4(1), pages 98-100, February.
    2. Milanovic, Branko, 1994. "The Gini-Type Functions: An Alternative Derivation," Bulletin of Economic Research, Wiley Blackwell, vol. 46(1), pages 81-90, January.
    3. Lambert, Peter J & Aronson, J Richard, 1993. "Inequality Decomposition Analysis and the Gini Coefficient Revisited," Economic Journal, Royal Economic Society, vol. 103(420), pages 1221-1227, September.
    4. Anthony F. Shorrocks & James E. Foster, 1987. "Transfer Sensitive Inequality Measures," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(3), pages 485-497.
    5. Lerman, Robert I. & Yitzhaki, Shlomo, 1984. "A note on the calculation and interpretation of the Gini index," Economics Letters, Elsevier, vol. 15(3-4), pages 363-368.
    6. Sastry, D V S & Kelkar, Ujwala R, 1994. "Note on the Decomposition of Gini Inequality," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 584-586, August.
    Full references (including those not matched with items on IDEAS)

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Wealth inequality: measurement, resilience, and an anti-Rentoul hypothesis
      by paulinlancs in Though Cowards Flinch on 2012-12-29 01:20:05

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    Cited by:

    1. Kwang Soo Cheong, 1999. "Economic Crisis and Income Inequality in Korea," Working Papers 199906, University of Hawaii at Manoa, Department of Economics.

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    More about this item

    Keywords

    Income Inequality; the Gini coeffcient; and the Lorenz curve;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

    Statistics

    Access and download statistics

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