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The Construction and Interpretation of Combined Cross-Section and Time-Series Inequality Datasets

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  • Joseph Francois

    ()
    (Johannes Kepler University (Linz))

  • Hugo Rojas-Romagosa

    ()
    (CPB (the Hague))

Abstract

The inequality dataset compiled in the 1990s by the World Bank and extended by the UN has been both widely used and strongly criticized. The criticisms raise questions about conclusions drawn from secondary inequality datasets in general. We develop techniques to deal with national and international comparability problems intrinsic to such datasets. The result is a new dataset of consistent inequality series, allowing us to explore problems of measurement error. In addition, the new data allow us to perform parametric non-linear estimation of Lorenz curves from grouped data. This in turn allows us to estimate the entire income distribution, computing alternative inequality indexes and poverty estimates. Finally, we have used our broadly comparable dataset to examine international patterns of inequality and poverty.

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Bibliographic Info

Paper provided by Institue for International and Development Economics in its series IIDE Discussion Papers with number 20070805.

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Length: 64 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:lnz:wpaper:20070805

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Keywords: Income distribution datasets; inequality trends; Lorenz curve estimation; poverty estimation;

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  1. Xavier Sala-i-Martin, 2002. "The World Distribution of Income (estimated from Individual Country Distributions)," NBER Working Papers 8933, National Bureau of Economic Research, Inc.
  2. Atkinson, A-B, 1996. "Bringing Income Distribution in from the Cold," Economics Papers 117, Economics Group, Nuffield College, University of Oxford.
  3. Ravallion, Martin, 2001. "Growth, inequality, and poverty : looking beyond averages," Policy Research Working Paper Series 2558, The World Bank.
  4. Kakwani, Nanak, 1980. "On a Class of Poverty Measures," Econometrica, Econometric Society, vol. 48(2), pages 437-46, March.
  5. Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, vol. 50(197), pages 3-17, February.
  6. Barro, Robert J, 2000. " Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
  7. Dollar, David & Kraay, Aart, 2002. " Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
  8. Villasenor, JoseA. & Arnold, Barry C., 1989. "Elliptical Lorenz curves," Journal of Econometrics, Elsevier, vol. 40(2), pages 327-338, February.
  9. Anthony B. Atkinson & Andrea Brandolini, 2000. "Promise and Pitfalls in the Use of 'Secondary' Data-Sets: Income Inequality in OECD Countries," Temi di discussione (Economic working papers) 379, Bank of Italy, Economic Research and International Relations Area.
  10. Kakwani, Nanak C & Podder, N, 1976. "Efficient Estimation of the Lorenz Curve and Associated Inequality Measures from Grouped Observations," Econometrica, Econometric Society, vol. 44(1), pages 137-48, January.
  11. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
  12. Xavier Sala-i-Martin, 2002. "The Disturbing "Rise" of Global Income Inequality," NBER Working Papers 8904, National Bureau of Economic Research, Inc.
  13. Jean-Marc Burniaux & Thai-Thanh Dang & Douglas Fore & Michael F. Förster & Marco Mira d'Ercole & Howard Oxley, 1998. "Income Distribution and Poverty in Selected OECD Countries," OECD Economics Department Working Papers 189, OECD Publishing.
  14. Ortega, P, et al, 1991. "A New Functional Form for Estimating Lorenz Curves," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 37(4), pages 447-52, December.
  15. Rasche, R H, et al, 1980. "Functional Forms for Estimating the Lorenz Curve: Comment," Econometrica, Econometric Society, vol. 48(4), pages 1061-62, May.
  16. Ravallion, Martin & Datt, Gaurav & van de Walle, Dominique, 1991. "Quantifying Absolute Poverty in the Developing World," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 37(4), pages 345-61, December.
  17. Ravallion, Martin & Chen, Shaohua, 1997. "What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?," World Bank Economic Review, World Bank Group, vol. 11(2), pages 357-82, May.
  18. Sarabia, J. -M. & Castillo, Enrique & Slottje, Daniel J., 1999. "An ordered family of Lorenz curves," Journal of Econometrics, Elsevier, vol. 91(1), pages 43-60, July.
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  20. Datt, Gaurav, 1998. "Computational tools for poverty measurement and analysis," FCND discussion papers 50, International Food Policy Research Institute (IFPRI).
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Cited by:
  1. Thomas Goda, 2013. "Changes in income inequality from a global perspective: an overview," Working Papers PKWP1303, Post Keynesian Economics Study Group (PKSG).
  2. Jan Luiten van Zanden & Joerg Baten & Peter Foldvari & Bas van Leeuwen, 2011. "The Changing Shape of Global Inequality - exploring a new dataset," Working Papers 0001, Utrecht University, Centre for Global Economic History.
  3. Jean-Marie Viaene & Itzhak Zilcha, 2009. "Human Capital and Inequality Dynamics: The Role of Education Technology," Economica, London School of Economics and Political Science, vol. 76(304), pages 760-778, October.
  4. Martin Gassebner & Noel Gaston & Michael J Lamla, 2008. "Relief For The Environment? The Importance Of An Increasingly Unimportant Industrial Sector," Economic Inquiry, Western Economic Association International, vol. 46(2), pages 160-178, 04.
  5. Leandro Prados de la Escosura, 2006. "Growth, Inequality, and Poverty in Spain, 1850-2000: Evidence and Speculation," Working Papers in Economic History wp06-04, Universidad Carlos III, Departamento de Historia Económica e Instituciones.
  6. Bas van Leeuwen & Peter Foldvari, 2012. "The development of inequality and poverty in Indonesia, 1932-1999," Working Papers 0026, Utrecht University, Centre for Global Economic History.
  7. Axel Dreher & Noel Gaston, 2006. "Has globalization increased inequality?," KOF Working papers 06-140, KOF Swiss Economic Institute, ETH Zurich.
  8. Carmen Fillat & Joseph Francois, 2004. "National and international income dispersion and aggregate expenditures," Documentos de Trabajo dt2004-06, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
  9. Rabindra Bhandari & Gyan Pradhan & Mukti Upadhyay, 2010. "Another empirical look at the Kuznets curve," International Journal of Economic Sciences and Applied Research (IJESAR), Technological Educational Institute (TEI) of Kavala, Greece, vol. 3(2), pages 7-19, December.
  10. Hugo Rojas-Romagosa & J.F. Francois, 2008. "Reassessing the relationship between inequality and development," CPB Discussion Paper 107, CPB Netherlands Bureau for Economic Policy Analysis.

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