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A Dominance Criterion for Measuring Income Inequality from a Centrist View: The Case of Australia

Author

Listed:
  • Francisco Azpitarte

    () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Olga Alonso-Villar

    (Department of Applied Economics, University of Vigo)

Abstract

This paper introduces a new Lorenz dominance criterion that allows ranking income distributions according to centrist measures à la Seidl and Pfingsten (1997). In doing so, it defines a-Lorenz curves by adapting the generalized Lorenz curves to this case. In addition, it provides an empirical illustration of these tools using Australian income data for the period 2001–2008. The results suggest that despite the reduction of relative inequality, inequality increased for most centrist value judgments.

Suggested Citation

  • Francisco Azpitarte & Olga Alonso-Villar, 2012. "A Dominance Criterion for Measuring Income Inequality from a Centrist View: The Case of Australia," Melbourne Institute Working Paper Series wp2012n03, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  • Handle: RePEc:iae:iaewps:wp2012n03
    as

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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2012n03.pdf
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    References listed on IDEAS

    as
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    3. Bossert, Walter & Pfingsten, Andreas, 1990. "Intermediate inequality: concepts, indices, and welfare implications," Mathematical Social Sciences, Elsevier, vol. 19(2), pages 117-134, April.
    4. Paul Blacklow & Ranjan Ray, 2000. "A Comparison of Income and Expenditure Inequality Estimates: The Australian Evidence, 1975-76 to 1993-94," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 33(4), pages 317-329.
    5. Coral Río & Olga Alonso-Villar, 2010. "New unit-consistent intermediate inequality indices," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 42(3), pages 505-521, March.
    6. Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, vol. 50(197), pages 3-17, February.
    7. Kolm, Serge-Christophe, 1976. "Unequal inequalities. II," Journal of Economic Theory, Elsevier, vol. 13(1), pages 82-111, August.
    8. Tateo Yoshida, 2005. "Social welfare rankings of income distributions A new parametric concept of intermediate inequality," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 24(3), pages 557-574, June.
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    10. Coral del RÎo & Javier Ruiz-Castillo, 2000. "Intermediate inequality and welfare," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 17(2), pages 223-239.
    11. Coral del Río & Olga Alonso-Villar, 2007. "Rankings of Income Distributions: A Note on Intermediate Inequality Indices," Working Papers 68, ECINEQ, Society for the Study of Economic Inequality.
    12. Satya Chakravarty & Swami Tyagarupananda, 2009. "The subgroup decomposable intermediate indices of inequality," Spanish Economic Review, Springer;Spanish Economic Association, vol. 11(2), pages 83-97, June.
    13. Seidl, Christian & Theilen, Bernd, 1994. "Stochastic independence of distributional attitudes and social status : A comparison of German and Polish data," European Journal of Political Economy, Elsevier, vol. 10(2), pages 295-310, July.
    14. Buhong Zheng, 2007. "Unit-Consistent Decomposable Inequality Measures," Economica, London School of Economics and Political Science, vol. 74(293), pages 97-111, February.
    15. Saunders, Peter & Stott, Helen & Hobbes, Garry, 1991. "Income Inequality in Australia and New Zealand: International Comparisons and Recent Trends," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 37(1), pages 63-79, March.
    16. Dasgupta, Partha & Sen, Amartya & Starrett, David, 1973. "Notes on the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 6(2), pages 180-187, April.
    17. George Athanasopoulos & Farshid Vahid, 2003. "Statistical Inference and Changes in Income Inequality in Australia," The Economic Record, The Economic Society of Australia, vol. 79(247), pages 412-424, December.
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    More about this item

    Keywords

    Income distribution; Lorenz dominance; intermediate inequality indices; Ray-invariance; Australia;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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