IDEAS home Printed from https://ideas.repec.org/a/aea/apandp/v108y2018p114-18.html
   My bibliography  Save this article

Applying Generalized Pareto Curves to Inequality Analysis

Author

Listed:
  • Thomas Blanchet
  • Bertrand Garbinti
  • Jonathan Goupille-Lebret
  • Clara Martínez-Toledano

Abstract

A generalized Pareto curve is defined as the curve of inverted Pareto coefficients b(p), where b(p) is the ratio between average income or wealth above rank p and the p-th quantile. We present this concept and show how it can be used to better estimate distributions, especially from tax tabulations. By providing a simple decomposition of top shares, we discuss how studying inverted Pareto coefficients can improve the understanding of inequality dynamics. We also show how it helps to better analyze wealth and income concentrations along the distribution, using data for France, Spain, the United States, and China.

Suggested Citation

  • Thomas Blanchet & Bertrand Garbinti & Jonathan Goupille-Lebret & Clara Martínez-Toledano, 2018. "Applying Generalized Pareto Curves to Inequality Analysis," AEA Papers and Proceedings, American Economic Association, vol. 108, pages 114-118, May.
  • Handle: RePEc:aea:apandp:v:108:y:2018:p:114-18
    Note: DOI: 10.1257/pandp.20181075
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/pandp.20181075
    Download Restriction: no

    File URL: https://www.aeaweb.org/articles/attachments?retrieve=_lfKWMweHVAH8xz8mDVgNPpkZuhZ2buj
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Thomas Piketty & Li Yang & Gabriel Zucman, 2019. "Capital Accumulation, Private Property, and Rising Inequality in China, 1978–2015," American Economic Review, American Economic Association, vol. 109(7), pages 2469-2496, July.
    2. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 2016. "Appendix to "Accounting for Wealth Inequality Dynamics: Methods, Estimates and Simulations for France (1800-2014)"," Working Papers halshs-02794354, HAL.
    3. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 0. "Accounting for Wealth-Inequality Dynamics: Methods, Estimates, and Simulations for France," Journal of the European Economic Association, European Economic Association, vol. 19(1), pages 620-663.
    4. Thomas Blanchet & Juliette Fournier & Thomas Piketty, 2022. "Generalized Pareto Curves: Theory and Applications," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 263-288, March.
    5. Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2018. "Distributional National Accounts: Methods and Estimates for the United States," The Quarterly Journal of Economics, Oxford University Press, vol. 133(2), pages 553-609.
    6. Garbinti, Bertrand & Goupille-Lebret, Jonathan & Piketty, Thomas, 2018. "Income inequality in France, 1900–2014: Evidence from Distributional National Accounts (DINA)," Journal of Public Economics, Elsevier, vol. 162(C), pages 63-77.
    7. Emmanuel Saez & Gabriel Zucman, 2016. "Editor's Choice Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data," The Quarterly Journal of Economics, Oxford University Press, vol. 131(2), pages 519-578.
    8. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 2017. "Appendix to "Income Inequality in France, 1900-2014: Evidence from Distributional National Accounts"," Working Papers 201705, World Inequality Lab.
    9. Facundo Alvaredo & Lucas Chancel & Thomas Piketty & Gabriel Zucman, 2018. "Distributional National Accounts," Post-Print halshs-03342488, HAL.
    10. Simon Kuznets & Elizabeth Jenks, 1953. "Shares of Upper Income Groups in Income and Savings (1953)," NBER Books, National Bureau of Economic Research, Inc, number kuzn53-1, January.
    11. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 2016. "Accounting for Wealth Inequality Dynamics: Methods, Estimates and Simulations for France (1800-2014)," PSE Working Papers halshs-02794339, HAL.
    12. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality in the United States, 1913–1998," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 1-41.
    13. Thomas Piketty & Li Yang & Gabriel Zucman, 2017. "Appendix to "Capital Accumulation, Private Property and Rising Inequality in China, 1978-2015"," Working Papers 201707, World Inequality Lab.
    14. Simon Kuznets & Elizabeth Jenks, 1953. "Shares of Upper Income Groups in Savings," NBER Chapters, in: Shares of Upper Income Groups in Income and Savings (1953), pages 171-218, National Bureau of Economic Research, Inc.
    15. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 2017. "Income Inequality in France, 1900-2014: Evidence from Distributional National Accounts," Working Papers 201704, World Inequality Lab.
    16. Thomas Piketty & Li Yang & Gabriel Zucman, 2019. "Capital Accumulation, Private Property, and Rising Inequality in China, 1978–2015," American Economic Review, American Economic Association, vol. 109(7), pages 2469-2496, July.
    17. Thomas Piketty, 2003. "Income Inequality in France, 1901-1998," Journal of Political Economy, University of Chicago Press, vol. 111(5), pages 1004-1042, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vladimir Hlasny, 2021. "Parametric representation of the top of income distributions: Options, historical evidence, and model selection," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1217-1256, September.
    2. Luis Bauluz & Filip Novokmet & Moritz Schularick, 2022. "The Anatomy of the Global Saving Glut," ECONtribute Discussion Papers Series 161, University of Bonn and University of Cologne, Germany.
    3. Heck, Ines & Kapeller, Jakob & Wildauer, Rafael, 2020. "Vermögenskonzentration in Österreich: Ein Update auf Basis des HFCS 2017," Greenwich Papers in Political Economy 30683, University of Greenwich, Greenwich Political Economy Research Centre.
    4. Rustam Ibragimov & Paul Kattuman & Anton Skrobotov, 2021. "Robust Inference on Income Inequality: $t$-Statistic Based Approaches," Papers 2105.05335, arXiv.org, revised Nov 2021.
    5. Marko Ledic & Ivica Rubil & Ivica Urban, 2022. "Missing top incomes and tax-benefit microsimulation: evidence from correcting household survey data using tax records data," Working Papers 2201, The Institute of Economics, Zagreb.
    6. Luis Bauluz & Filip Novokmet & Moritz Schularick, 2022. "The Anatomy of the Global Saving Glut," World Inequality Lab Working Papers halshs-03693216, HAL.
    7. Bertrand Garbinti & Jonathan Goupille-Lebret, 2019. "Inégalités de revenus et de richesse en France : évolutions et liens sur longue période," Working Papers 1934, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    8. Luis Bauluz & Filip Novokmet & Moritz Schularick, 2022. "The Anatomy of the Global Saving Glut," CESifo Working Paper Series 9732, CESifo.
    9. Luis Bauluz & Filip Novokmet & Moritz Schularick, 2022. "The Anatomy of the Global Saving Glut," Working Papers halshs-03693216, HAL.
    10. Pablo Gutiérrez Cubillos, 2022. "Gini and undercoverage at the upper tail: a simple approximation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(2), pages 443-471, April.
    11. Ines Heck & Jakob Kapeller & Rafael Wildauer, 2020. "Vermögenskonzentration in Österreich," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 206, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Garbinti, Bertrand & Goupille-Lebret, Jonathan & Piketty, Thomas, 2018. "Income inequality in France, 1900–2014: Evidence from Distributional National Accounts (DINA)," Journal of Public Economics, Elsevier, vol. 162(C), pages 63-77.
    2. Filip Novokmet & Thomas Piketty & Gabriel Zucman, 2018. "From Soviets to oligarchs: inequality and property in Russia 1905-2016," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(2), pages 189-223, June.
    3. Facundo Alvaredo & Lydia Assouad & Thomas Piketty, 2019. "Measuring lnequality in the Middle East 1990–2016: The World’s Most Unequal Region?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 65(4), pages 685-711, December.
    4. Gabriel Zucman, 2019. "Global Wealth Inequality," NBER Working Papers 25462, National Bureau of Economic Research, Inc.
    5. Annette Alstadsæter & Niels Johannesen & Gabriel Zucman, 2019. "Tax Evasion and Inequality," American Economic Review, American Economic Association, vol. 109(6), pages 2073-2103, June.
    6. Thilo N. H. Albers & Charlotte Bartels & Moritz Schularick, 2020. "The Distribution of Wealth in Germany, 1895-2018," ECONtribute Policy Brief Series 001, University of Bonn and University of Cologne, Germany.
    7. Bukowski, Pawel & Novokmet, Filip, 2019. "Between communism and capitalism: long-term inequality in Poland, 1892-2015," LSE Research Online Documents on Economics 102834, London School of Economics and Political Science, LSE Library.
    8. Pawel Bukowski & Filip Novokmet, 2019. "Between Communism and Capitalism: Long-Term Inequality in Poland, 1892- 2015," World Inequality Lab Working Papers hal-02876995, HAL.
    9. Pawel Bukowski & Filip Novokmet, 2018. "Inequality in Poland: Estimating the whole distribution by g-percentile 1983-2015," LIS Working papers 731, LIS Cross-National Data Center in Luxembourg.
    10. Pawel Bukowski & Filip Novokmet, 2019. "Between Communism and Capitalism: Long-Term Inequality in Poland, 1892- 2015," Working Papers hal-02876995, HAL.
    11. Thomas Blanchet & Juliette Fournier & Thomas Piketty, 2022. "Generalized Pareto Curves: Theory and Applications," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 263-288, March.
    12. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 2017. "Income Inequality in France, 1900-2014: Evidence from Distributional National Accounts," Working Papers 201704, World Inequality Lab.
    13. Bukowski, Pawel & Novokmet, Filip, 2019. "Between communism and capitalism: long-term inequality in Poland, 1892-2015," LSE Research Online Documents on Economics 102814, London School of Economics and Political Science, LSE Library.
    14. Pawel Bukowski & Filip Novokmet, 2019. "Between communism and capitalism: long-term inequality in Poland, 1892-2015," CEP Discussion Papers dp1628, Centre for Economic Performance, LSE.
    15. Bozio, Antoine & Garbinti, Bertrand & Goupille-Lebret, Jonathan & Guillot, Malka & Piketty, Thomas, 2020. "Predistribution vs. Redistribution: Evidence from France and the U.S," CEPR Discussion Papers 15415, C.E.P.R. Discussion Papers.
    16. Aroop Chatterjee & Léo Czajka & Amory Gethin, 2020. "Estimating the Distribution of Household Wealth in South Africa," Working Papers hal-02876974, HAL.
    17. Thomas Blanchet & Ignacio Flores & Marc Morgan, 2022. "The weight of the rich: improving surveys using tax data," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(1), pages 119-150, March.
    18. Advani, Arun & Summers, Andy & Tarrant, Hannah, 2020. "Measuring UK top incomes," CAGE Online Working Paper Series 490, Competitive Advantage in the Global Economy (CAGE).
    19. Nora Lustig, 2019. "The “Missing Rich” in Household Surveys: Causes and Correction Approaches," Commitment to Equity (CEQ) Working Paper Series 75, Tulane University, Department of Economics.
    20. Lucas Chancel, 2019. "Ten facts about income inequality in advanced economies," Working Papers hal-02876982, HAL.

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • P36 - Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:apandp:v:108:y:2018:p:114-18. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.