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Income Thresholds and Income Classes

  • Conchita D'Ambrosio
  • Pietro Muliere
  • Piercesare Secchi

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.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.40157.de/dp325.pdf
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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 325.

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Length: 15 p.
Date of creation: 2003
Date of revision:
Handle: RePEc:diw:diwwpp:dp325
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  1. Esteban, Joan & Ray, Debraj, 1994. "On the Measurement of Polarization," Econometrica, Econometric Society, vol. 62(4), pages 819-51, 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 for the Study of Labor (IZA).
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