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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 Panthéon-Sorbonne - Paris I)
Olivier Nunez (Universidad Carlos III de Madrid - Universidad Carlos III de Madrid)

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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_v1.

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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_v1

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Keywords: income distribution ; mixture models;

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  7. Cowell, Frank A & Jenkins, Stephen P, 1995. "How Much Inequality Can We Explain? A Methodology and an Application to the United States," Economic Journal, Royal Economic Society, vol. 105(429), pages 421-30, March. [Downloadable!] (restricted)
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  13. 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)
  14. Jenkins, Stephen P, 1996. "Recent Trends in the UK Income Distribution: What Happened and Why?," Oxford Review of Economic Policy, Oxford University Press, vol. 12(1), pages 29-46, Spring.
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  1. 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, vol. 6(2), pages 149-184, June. [Downloadable!] (restricted)
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