Inequality and the accounting period
Income inequality typically declines with the length of time taken into account for measurement. This note derives an exact analytical relationship between the accounting period and inequality as measured by the Gini index. The formal relationship is similar to the decomposition of the coefficient of variation. The methodology is illustrated with panel data on urban wages from Mexico. It is found that the effect of the accounting period on inequality is sensitive to the properties of the Gini correlations between the periodical incomes. Reporting this type of correlation enables the evaluation of the impact of the length of the accounting period on inequality.
Volume (Year): 4 (2003)
Issue (Month): 36 ()
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- Gibson, John & Huang, Jikun & Rozelle, Scott, 2001. "Why is income inequality so low in China compared to other countries?: The effect of household survey methods," Economics Letters, Elsevier, vol. 71(3), pages 329-333, June.
- Creedy, John, 1979. "The Inequality of Earnings and the Accounting Period," Scottish Journal of Political Economy, Scottish Economic Society, vol. 26(1), pages 89-96, February.
- Richard V. Burkhauser & John G. Poupore, 1997. "A Cross-National Comparison Of Permanent Inequality In The United States And Germany," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 10-17, February.
- Schechtman, E. & Yitzhaki, S., 1999. "On the proper bounds of the Gini correlation," Economics Letters, Elsevier, vol. 63(2), pages 133-138, May.
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