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Unit Consistency And Bipolarization Of Income Distributions

  • M-super-a Casilda Lasso de la Vega
  • Ana Urrutia
  • Henar Díez

Many polarization measures proposed in the literature assume some invariance condition. Clearly, each invariance condition imposes a specific value judgment on polarization measurement. In inequality and poverty measurement, B. Zheng suggests rejecting these invariance conditions as axioms, and proposes replacing them with the unit-consistency axiom. This property demands that the inequality or poverty rankings, rather than their cardinal values, are not altered when income is measured in different monetary units. Following Zheng's proposal we explore the consequences of the unit-consistency axiom in the bipolarization field. We introduce a new family of Krtscha-type intermediate bipolarization indices, and also propose and characterize a class of intermediate polarization orderings which are unit-consistent. Finally, a short empirical application using data from Spain is also provided to illustrate how the bipolarization orderings proposed may be used in practice. Copyright 2009 The Authors. Journal compilation International Association for Research in Income and Wealth 2009.

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Article provided by International Association for Research in Income and Wealth in its journal Review of Income and Wealth.

Volume (Year): 56 (2010)
Issue (Month): 1 (03)
Pages: 65-83

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Handle: RePEc:bla:revinw:v:56:y:2010:i:1:p:65-83
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  1. Chakravarty, Satya R & Majumder, Amita, 2001. "Inequality, Polarisation and Welfare: Theory and Applications," Australian Economic Papers, Wiley Blackwell, vol. 40(1), pages 1-13, March.
  2. Joan-Maria Esteban & Debraj Ray, 1991. "On the Measurement of Polarization," Boston University - Institute for Economic Development 18, Boston University, Institute for Economic Development.
  3. Wolfson, Michael C, 1997. "Divergent Inequalities: Theory and Empirical Results," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 43(4), pages 401-21, December.
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  12. Joe C. Davis & John H. Huston, 1992. "The Shrinking Middle-Income Class: A Multivariate Analysis," Eastern Economic Journal, Eastern Economic Association, vol. 18(3), pages 277-285, Summer.
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  15. Satya R. Chakravarty & Conchita D'Ambrosio, 2010. "Polarization Orderings Of Income Distributions," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(1), pages 47-64, 03.
  16. Buhong Zheng, 2007. "Unit-Consistent Decomposable Inequality Measures," Economica, London School of Economics and Political Science, vol. 74(293), pages 97-111, 02.
  17. Buhong Zheng, 2007. "Unit-Consistent Poverty Indices," Economic Theory, Springer, vol. 31(1), pages 113-142, April.
  18. Wolfson, Michael C, 1994. "When Inequalities Diverge," American Economic Review, American Economic Association, vol. 84(2), pages 353-58, May.
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