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Inference for the neighborhood inequality index

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  • ANDREOLI Francesco

Abstract

The neighborhood inequality (NI) index measures aspects of spatial inequality in the distribution of incomes within the city. The NI index is defi ned as a population average of the normalized income gap between each individual's income (observed at a given location in the city) and the incomes of the neighbors, living within a certain distance range from that individual. This paper provides minimum bounds for the NI index standard error and shows that unbiased estimators can be identifi ed under fairly common hypothesis in spatial statistics. These estimators are shown to depend exclusively on the variogram, a measure of spatial dependence in the data. Rich income data are then used to infer about trends of neighborhood inequality in Chicago, IL over the last 35 years. Results from a Monte Carlo study support the relevance of the standard error approximations.

Suggested Citation

  • ANDREOLI Francesco, 2018. "Inference for the neighborhood inequality index," LISER Working Paper Series 2018-19, Luxembourg Institute of Socio-Economic Research (LISER).
    • Handle: RePEc:irs:cepswp:2018-19
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    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C46 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Specific Distributions
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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