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Estimation of income distribution and detection of subpopulations: an explanatory model

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Author Info

  • Emmanuel Flachaire

    ()
    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)

  • Olivier Nunez

    (Universidad Carlos III de Madrid [Madrid] - Universidad Carlos III de Madrid)

Abstract

Empirical evidence, obtained from nonparametric estimation of the income distribution, exhibits strong heterogeneity in most populations of interest. It is common, therefore, to suspect that the population is composed of several homogeneous subpopulations. Such an assumption leads us to consider mixed income distributions whose components feature the distributions of the incomes of a particular homogeneous subpopulation. A model with mixing probabilities that are allowed to vary with exogenous individual variables that characterize each subpopulation is developed. This model simultaneously provides a flexible estimation of the income distribution, a breakdown into several subpopulations and an explanation of income heterogeneity.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00175923.

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Date of creation: Apr 2007
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Publication status: Published, Computational Statistics & Data Analysis / Computational Statistics and Data Analysis, 2007, 51, 7, 3368-3380
Handle: RePEc:hal:cesptp:halshs-00175923

Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00175923
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Keywords: income distribution ; mixture models;

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  4. Davidson, Russell & Flachaire, Emmanuel, 2007. "Asymptotic and bootstrap inference for inequality and poverty measures," Journal of Econometrics, Elsevier, Elsevier, vol. 141(1), pages 141-166, November.
  5. Russell Davidson & Jean-Yves Duclos, 2000. "Statistical Inference for Stochastic Dominance and for the Measurement of Poverty and Inequality," Econometrica, Econometric Society, Econometric Society, vol. 68(6), pages 1435-1464, November.
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  7. DAVIDSON, Russell & DUCLOS, Jean-Yves, 1995. "Statistical Inference for the Measurement of the Incidences of Taxes and Transfers," Cahiers de recherche, Université Laval - Département d'économique 9521, Université Laval - Département d'économique.
  8. Jenkins, Stephen P., 1995. "Did the middle class shrink during the 1980s? UK evidence from kernel density estimates," Economics Letters, Elsevier, Elsevier, vol. 49(4), pages 407-413, October.
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  12. Cowell, F.A., 2000. "Measurement of inequality," Handbook of Income Distribution, Elsevier, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 2, pages 87-166 Elsevier.
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  14. McDonald, James B, 1984. "Some Generalized Functions for the Size Distribution of Income," Econometrica, Econometric Society, Econometric Society, vol. 52(3), pages 647-63, May.
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Cited by:
  1. Ivana Malá, 2012. "The Use of Finite Mixtures of Lognormal Distribution for the Modelling of Income Distributions," Acta Oeconomica Pragensia, University of Economics, Prague, vol. 2012(4), pages 26-39.
  2. Dorothée Boccanfuso & Bernard Decaluwé & Luc Savard, 2008. "Poverty, income distribution and CGE micro-simulation modeling: Does the functional form of distribution matter?," Journal of Economic Inequality, Springer, Springer, vol. 6(2), pages 149-184, June.
  3. William E. Griffiths and Gholamreza Hajargasht, 2012. "GMM Estimation of Mixtures from Grouped Data:," Department of Economics - Working Papers Series, The University of Melbourne 1148, The University of Melbourne.
  4. Longford, Nicholas T. & Pittau, Maria Grazia, 2003. "Stability of household income in European countries in the 1990's," IRISS Working Paper Series, IRISS at CEPS/INSTEAD 2003-08, IRISS at CEPS/INSTEAD.

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