The Relationship between the Equivalence Scale and the Inequality Index and Its Impact on the Measurement of Income Inequality
AbstractThe paper discusses the ∪-shaped relationship between the equivalence scale n^ε and the Gini index instead of considering the equivalence scale’s relationship to the generalised entropy measures, which was studied by Coulter, et al. (1992). An end-point condition is given for the ∪-shaped relationship, which corresponds to a condition for that of the generalised entropy measures. Additionally, using a mixture of log-normal distributions approach, five factors are shown to be required for a convex relationship between size elasticity and the Gini index. Empirically, income distributions satisfy those factors. Thus, the end-point condition essentially determines the shape of the relationship.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 37410.
Date of creation: 12 Mar 2012
Date of revision:
inequality; income distribution; equivalence scale;
Find related papers by JEL classification:
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-28 (All new papers)
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