Is it all about the tails? The Palma measure of income inequality
The ``Palma'' is the ratio of national income shares of the top 10 percent of households to the bottom 40 percent, reflecting Gabriel Palma's observation of the stability of the ``middle'' 50 percent share of income across countries so that distribution is largely a question of the tails. In this paper we explore the Palma and corroborate the findings that the middle does indeed hold over time and through various stages of tax and transfers. Further, we find that the Gini is almost completely ``explained'' by only two points of the distribution: the same income shares which determine the Palma. It thus appears that both the Gini and the Palma, in practice, summarize the same information about the income distribution: but only in the case of the Palma is this explicit. This, we argue, makes the Palma a more useful (and intuitive) measure of inequality for policymakers and citizens to track.
|Date of creation:||Oct 2013|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.ecineq.org|
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Augustin Kwasi Fosu, 2011.
"Growth, Inequality, and Poverty Reduction in Developing Countries: Recent Global Evidence,"
CSAE Working Paper Series
2011-07, Centre for the Study of African Economies, University of Oxford.
- Augustin Kwasi Fosu, 2011. "Growth, Inequality, and Poverty Reduction in Developing Countries: Recent Global Evidence," Economics Series Working Papers WPS/2011-07, University of Oxford, Department of Economics.
- Augustin Kwasi Fosu, 2011. "Growth, Inequality, and Poverty Reduction in Developing Countries: Recent Global Evidence," Working Paper Series UNU-WIDER Working Paper W, World Institute for Development Economic Research (UNU-WIDER).
- Augustin Kwasi Fosu, 2011. "Growth, inequality, and poverty reduction in developing countries: recent global evidence," Brooks World Poverty Institute Working Paper Series 14711, BWPI, The University of Manchester.
- José Gabriel Palma, 2006. "Globalizing Inequality: ‘Centrifugal’ and ‘Centripetal’ Forces at Work," Working Papers 35, United Nations, Department of Economics and Social Affairs.
- Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198281931.
- Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2009.
"Top Incomes in the Long Run of History,"
NBER Working Papers
15408, National Bureau of Economic Research, Inc.
- Benito Frosini, 2012. "Approximation and decomposition of Gini, Pietra–Ricci and Theil inequality measures," Empirical Economics, Springer, vol. 43(1), pages 175-197, August.
- Francesca Greselin & Leo Pasquazzi & Ričardas Zitikis, 2013. "Contrasting the Gini and Zenga indices of economic inequality," Journal of Applied Statistics, Taylor & Francis Journals, vol. 40(2), pages 282-297, February.
- Villasenor, JoseA. & Arnold, Barry C., 1989. "Elliptical Lorenz curves," Journal of Econometrics, Elsevier, vol. 40(2), pages 327-338, February.
- Palma, J.G., 2011. "Homogeneous middles vs. heterogeneous tails, and the end of the ‘Inverted-U’: the share of the rich is what it's all about," Cambridge Working Papers in Economics 1111, Faculty of Economics, University of Cambridge.
- Juan Antonio Duro, 2008. "Cross-country inequalities in welfare and its decomposition by Sen factors: the virtues of the Theil index," Applied Economics Letters, Taylor & Francis Journals, vol. 15(13), pages 1041-1045.
- Shorrocks, Anthony & Wan, Guanghua, 2008. "Ungrouping Income Distributions: Synthesising Samples for Inequality and Poverty Analysis," Working Paper Series RP2008/16, World Institute for Development Economic Research (UNU-WIDER).
- Cornia, Giovanni Andrea & Addison, Tony & Kiiski, Sampsa, 2003. "Income Distribution Changes and their Impact in the Post-World War II Period," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
When requesting a correction, please mention this item's handle: RePEc:inq:inqwps:ecineq2013-308. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maria Ana Lugo)
If references are entirely missing, you can add them using this form.