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Charting Income Inequality: The Lorenz Curve

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  • Bellù, Lorenzo G.
  • Liberati, Paolo

Abstract

This paper explains how to build Lorenz Curves for income distributions and discusses their use for inequality measurement. A short conceptual background, a step-by-step procedure and a simple numerical example illustrate how to calculate and draw Lorenz Curves. A discussion on the use of Lorenz Curves to represent inequality is also provided. It highlights that the Lorenz Curve is one of the most used ways of representing income distributions in empirical works thanks to its immediate comparability with a “natural” benchmark, the Equidistribution line, representing the most egalitarian distribution. The concepts of Lorenz dominance and intersection of Lorenz Curves are also discussed. Furthermore, the appendix provides a detailed presentation of the properties of the Lorenz Curves.

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File URL: http://mpra.ub.uni-muenchen.de/30063/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 30063.

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Date of creation: 01 Nov 2005
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Handle: RePEc:pra:mprapa:30063

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Related research

Keywords: Lorenz curves; income distribution; inequality measures; Lorenzo dominance; equidistribution line; inequality; poverty;

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