Testing for Poverty Dominance: an Application to Canada
AbstractThe paper proposes and applies statistical tests for poverty dominance that check for whether poverty comparisons can be made robustly over ranges of poverty lines and classes of poverty indices. This helps provide both normative and statistical confidence in establishing poverty rankings across distributions. The tests, which can take into account the complex sampling procedures that are typically used by statistical agencies to generate household-level surveys, are implemented using the Canadian Survey of Labour and Income Dynamics (SLID) for 1996, 1999 and 2002. Although the yearly cumulative distribution functions cross at the lower tails of the distributions, the more recent years tend to dominate earlier years for a relatively wide range of poverty lines. Failing to take into account SLID's sampling variability (as is sometimes done) can inflate significantly one's confidence in ranking poverty. Taking into account SLID's complex sampling design (as has not been done before) can also decrease substantially the range of poverty lines over which a poverty ranking can be inferred.
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Bibliographic InfoPaper provided by CIRPEE in its series Cahiers de recherche with number 0836.
Date of creation: 2008
Date of revision:
Stochastic dominance; empirical likelihood; Canada; income distribution;
Other versions of this item:
- Wen-Hao Chen & Jean-Yves Duclos, 2011. "Testing for poverty dominance: an application to Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 44(3), pages 781-803, August.
- Chen, Wen-Hao & Duclos, Jean-Yves, 2008. "Testing for Poverty Dominance: An Application to Canada," IZA Discussion Papers 3829, Institute for the Study of Labor (IZA).
- Jean-Yves Duclos & Wen-Hao Chen, 2009. "Testing for Poverty Dominance: An Application to Canada," UFAE and IAE Working Papers 769.09, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Wen-Hao Chen & Jean-Yves Duclos, 2009. "Testing for poverty dominance: an application to Canada," Working Papers 379, Barcelona Graduate School of Economics.
- C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
- C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- I30 - Health, Education, and Welfare - - Welfare and Poverty - - - General
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