This paper is concerned with the problem of ranking Lorenz curves in situations where the Lorenz curves intersect and no unambiguous ranking can be attained witout introducing weaker ranking criteria than first-degree Lorenz dominance. To deal with such situations two alternative sequences of nested dominance criteria between Lorenz curves are introduced. At the limit the systems of dominance criteria appear to depend solely on the income share of either the worst-off or the best-off income recipient. This result suggests two alternative strategies for increasing the number of Lorenz curves that can be stricly ordered; one that focuses on changes that take place in the lower part of the income distribution. Furthermore, it is demonstrated that the sequences of dominance criteria characterize two separate systems of nested subfamilies of inequality measures and thus provide a method for identifying the least restrictive social preferences required to reach an unambiguous ranking of Lorenz curves.
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Paper provided by ICER - International Centre for Economic Research in its series ICER Working Papers with number
08-2000.
Length: 30 pages Date of creation: Jun 2000 Date of revision: Handle: RePEc:icr:wpicer:08-2000
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Find related papers by JEL classification: D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
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Shorrocks, Anthony F, 1983.
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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.)
Paul Makdissi & Jean-Yves Duclos, 2002.
"Socially-Improving Tax Reforms,"
Cahiers de recherche
02-01, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke, revised 2004.
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Jean-Yves Duclos & Paul Makdissi & Quentin Wodon, 2008.
"Socially Improving Tax Reforms,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1505-1537, November.
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