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Statistical Inference for 2 Measures of Inequality when Incomes are Correlated

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  • Van de gaer Dirk

    (Economics, National University of Ireland, Maynooth)

  • Nicola Funnell

    (Department of Economics, NUI, Maynooth)

  • Tom McCarthy

    ()
    (Department of Economics, NUI, Maynooth)

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    Abstract

    This paper derives the asymptotic normality of the distribution of difference in the Atkinson/Kolm and generalised entropy inequality measures when incomes are correlated. We illustrate the procedure by calculating the difference in inequality before and after tax in Ireland. Our empirical results suggest that the positive correlation between incomes before and after taxes substantially reduces the variance of the estimated difference in equality.

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    File URL: http://economics.nuim.ie/sites/economics.nuim.ie/files/working-papers/N821098.pdf
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    Bibliographic Info

    Paper provided by Department of Economics, Finance and Accounting, National University of Ireland - Maynooth in its series Economics, Finance and Accounting Department Working Paper Series with number n821098.

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    Length: 13 pages
    Date of creation: Oct 1998
    Date of revision:
    Handle: RePEc:may:mayecw:n821098

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    Postal: Maynooth, Co. Kildare
    Phone: 353-1-7083728
    Fax: 353-1-7083934
    Web page: http://economics.nuim.ie
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    1. Cowell, Frank A & Victoria-Feser, Maria-Pia, 1996. "Robustness Properties of Inequality Measures," Econometrica, Econometric Society, vol. 64(1), pages 77-101, January.
    2. Davidson, R. & Duclos, J.Y., 1995. "Statistical Inference for the Measurement of the Incidence of Taxes and Transfers," G.R.E.Q.A.M. 95a30, Universite Aix-Marseille III.
    3. Thistle, Paul D, 1990. "Large Sample Properties of Two Inequality Indices," Econometrica, Econometric Society, vol. 58(3), pages 725-28, May.
    4. Cowell, Frank A., 1989. "Sampling variance and decomposable inequality measures," Journal of Econometrics, Elsevier, vol. 42(1), pages 27-41, September.
    5. Mills, Jeffrey A & Zandvakili, Sourushe, 1997. "Statistical Inference via Bootstrapping for Measures of Inequality," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(2), pages 133-50, March-Apr.
    6. Duclos, Jean-Yves, 1997. "The asymptotic distribution of linear indices of inequality, progressivity and redistribution," Economics Letters, Elsevier, vol. 54(1), pages 51-57, January.
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