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Asymptotic Distribution Theory of Empirical Rank-dependent measures of Inequity

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  • Rolf Aaberge

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Abstract

A major aim of most income distribution studies is to make comparisons of income inequality across time for a given country and/or compare and rank different countries according to the level of income inequality. However, most of these studies lack information on sampling errors, which makes it difficult to judge the significance of the attained rankings. The purpose of this paper is to derive the asymptotic properties of the empirical rank-dependent family of inequality measures. A favourable feature of this family of inequality measures is that it includes the Gini coefficients, and that any member of this family can be given an explicit and simple expression in terms of the Lorenz curve. By relying on a result of Doksum [14] it is easily demonstrated that the empirical Lorenz curve, regarded as a stochastic process, converges to a Gaussian process. Moreover, this result forms the basis of the derivation of the asymptotic properties of the empirical rank-dependent measures of inequality.

Suggested Citation

  • Rolf Aaberge, 2006. "Asymptotic Distribution Theory of Empirical Rank-dependent measures of Inequity," ICER Working Papers 12-2006, ICER - International Centre for Economic Research.
  • Handle: RePEc:icr:wpicer:12-2006
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    References listed on IDEAS

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    1. Michael Sattinger (ed.), 2001. "Income Distribution," Books, Edward Elgar Publishing, volume 0, number 2018, September.
    2. Donaldson, David & Weymark, John A., 1980. "A single-parameter generalization of the Gini indices of inequality," Journal of Economic Theory, Elsevier, vol. 22(1), pages 67-86, February.
    3. Yaari, Menahem E, 1987. "The Dual Theory of Choice under Risk," Econometrica, Econometric Society, vol. 55(1), pages 95-115, January.
    4. Rolf Aaberge, 2009. "Ranking intersecting Lorenz curves," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 33(2), pages 235-259, August.
    5. Kolm, Serge-Christophe, 1976. "Unequal inequalities. II," Journal of Economic Theory, Elsevier, vol. 13(1), pages 82-111, August.
    6. Yitzhaki, Shlomo, 1983. "On an Extension of the Gini Inequality Index," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(3), pages 617-628, October.
    7. Donaldson, David & Weymark, John A., 1983. "Ethically flexible gini indices for income distributions in the continuum," Journal of Economic Theory, Elsevier, pages 353-358.
    8. Aaberge, Rolf, 2001. "Axiomatic Characterization of the Gini Coefficient and Lorenz Curve Orderings," Journal of Economic Theory, Elsevier, vol. 101(1), pages 115-132, November.
    9. Anthony F. Shorrocks & James E. Foster, 1987. "Transfer Sensitive Inequality Measures," Review of Economic Studies, Oxford University Press, vol. 54(3), pages 485-497.
    10. Weymark, John A., 1981. "Generalized gini inequality indices," Mathematical Social Sciences, Elsevier, vol. 1(4), pages 409-430, August.
    11. Kolm, Serge-Christophe, 1976. "Unequal inequalities. I," Journal of Economic Theory, Elsevier, vol. 12(3), pages 416-442, June.
    12. Rolf Aaberge, 2000. "Characterizations of Lorenz curves and income distributions," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 17(4), pages 639-653.
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    Citations

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    Cited by:

    1. Francesco Andreoli & Arnaud Lefranc, 2013. "Equalization of opportunity: Definitions and implementable conditions," Working Papers 310, ECINEQ, Society for the Study of Economic Inequality.
    2. Rolf Aaberge & Magne Mogstad, 2010. "Robust Inequality Comparisons," Discussion Papers 623, Statistics Norway, Research Department.
    3. Francesco Andreoli, 2013. "Inference for Inverse Stochastic Dominance," Working Papers 295, ECINEQ, Society for the Study of Economic Inequality.
    4. Rolf Aaberge & Magne Mogstad, 2011. "Robust inequality comparisons," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, pages 353-371.
    5. Rolf Aaberge, 2006. "Gini's Nuclear Family," Discussion Papers 491, Statistics Norway, Research Department.
    6. Rolf Aaberge, 2007. "Gini’s nuclear family," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, pages 305-322.
    7. Rolf Aaberge & Magne Mogstad, 2011. "Robust inequality comparisons," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, pages 353-371.

    More about this item

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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