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A note on the relationship between top income shares and the Gini coefficient

  • Alvaredo, Facundo

When a very top group of the income distribution, infinitesimal in numbers, owns a finite share S of total income, the Gini coefficient G can be approximated by G*(1 - S)Â +Â S, where G* is the Gini coefficient for the rest of the population. We provide a simple formal proof for this expression, give a general formula of the relationship when the top group is not infinitesimal, and offer two applications as illustrations.

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File URL: http://www.sciencedirect.com/science/article/B6V84-517BB1D-4/2/1205548783b8eafc32931059f06fa352
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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 110 (2011)
Issue (Month): 3 (March)
Pages: 274-277

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Handle: RePEc:eee:ecolet:v:110:y:2011:i:3:p:274-277
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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  1. Andrew Leigh, 2007. "How Closely Do Top Income Shares Track Other Measures of Inequality?," CEPR Discussion Papers 562, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  2. Dagum, Camilo, 1987. "Measuring the Economic Affluence between Populations of Income Receivers," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(1), pages 5-12, January.
  3. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality In The United States, 1913-1998," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 1-39, February.
  4. Atkinson, A. B. & Piketty, Thomas (ed.), 2007. "Top Incomes Over the Twentieth Century: A Contrast Between Continental European and English-Speaking Countries," OUP Catalogue, Oxford University Press, number 9780199286881, March.
  5. Dagum, Camilo, 1997. "A New Approach to the Decomposition of the Gini Income Inequality Ratio," Empirical Economics, Springer, vol. 22(4), pages 515-31.
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