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Measuring Income Polarization Using an Enlarged Middle Class

  • Chiara Gigliarano

    ()

    (Università Politecnica delle Marche, Ancona)

  • Pietro Muliere

    ()

    (Università Bocconi, Milano)

In this paper, a new class of polarization measures is derived axiomatically. The concept of polarization is here identified with the decline of the middle class. In particular, we extend the definition of middle class towards a more realistic framework: the middle class is defined in terms of central interval rather than median income. Then polarization is measured both as the presence of well-separated poles and as the dispersion inside the middle class. This new class of indices can be seen as a generalization of existing measures of income polarization. Also, a new polarization ordering is introduced. The new approach is illustrated with an application to EU countries.

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File URL: http://www.ecineq.org/milano/WP/ECINEQ2012-271.pdf
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Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 271.

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Length: 32 pages
Date of creation: Oct 2012
Date of revision:
Handle: RePEc:inq:inqwps:ecineq2012-271
Contact details of provider: Web page: http://www.ecineq.org
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  1. Andreas Peichl, 2007. "Measuring richness," German Stata Users' Group Meetings 2007 06, Stata Users Group.
  2. Chakravarty, Sanya R. & Majumdar, A. & Roy, Sonali, 2007. "A Treatment of Absolute Indices of Polarization," Staff General Research Papers 12811, Iowa State University, Department of Economics.
  3. Yoram Amiel & Frank Cowell & Xavier Ramos, 2010. "Poles Apart? An Analysis Of The Meaning Of Polarization," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(1), pages 23-46, 03.
  4. Juan G. Rodríguez & Rafael Salas, . "Extended Bi-Polarization And Inequality Measures," Working Papers 10-03 Classification-JEL , Instituto de Estudios Fiscales.
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