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Income Thresholds and Income Classes

Author

Listed:
  • Conchita D'Ambrosio
  • Pietro Muliere
  • Piercesare Secchi

Abstract

This paper proposes a method for detecting income classes based on the change-point problem. There is an increasing demand for such a method in the literature. Computation of polarization indices requires a pre-grouping of the incomes. Similarly, indices of social exclusion and sometimes indices of income inequality require detection of thresholds. The estimation procedure is implemented using a bootstrap technique. Finally, an application of the method to EU member states and to the United States is also considered.

Suggested Citation

  • Conchita D'Ambrosio & Pietro Muliere & Piercesare Secchi, 2003. "Income Thresholds and Income Classes," Discussion Papers of DIW Berlin 325, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp325
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.40157.de/dp325.pdf
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    References listed on IDEAS

    as
    1. Esteban, Joan & Ray, Debraj, 1994. "On the Measurement of Polarization," Econometrica, Econometric Society, vol. 62(4), pages 819-851, July.
    2. Tsakloglou, Panos & Papadopoulos, Fotis, 2001. "Identifying Population Groups at High Risk of Social Exclusion: Evidence from the ECHP," IZA Discussion Papers 392, Institute of Labor Economics (IZA).
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Guillermo Cruces & Luis Felipe López Calva & Diego Battistón, 2011. "Down and Out or Up and In? Polarization-Based Measures of the Middle Class for Latin America," CEDLAS, Working Papers 0113, CEDLAS, Universidad Nacional de La Plata.

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    More about this item

    Keywords

    income distribution; change-point; thresholds.;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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