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A Demarcation of the Gini Coefficient

Author

Listed:
  • Stark, Oded

    (University of Bonn)

  • Kosiorowski, Grzegorz

    (Cracow University of Economics)

Abstract

We specify the domain in the income distribution that includes the people to whom income transfers will not increase inequality in that income distribution. Inspired by Sen’s (1973, 1997) characterization of the Gini coefficient as a ratio between a measure of aggregate income-based “depression” (stress) and aggregate income, we inquire as to whether in the wake of an increase of an income or of incomes in a given income distribution, the Gini coefficient does not increase. To this end, we identify the corresponding “safe” domain and show that the pivotal value that demarcates this domain can be elicited from a simple linear function of the Gini coefficient itself. Our rule of demarcation provides for policy interventions that seek to increase a particular income or particular incomes while not exacerbating inequality in the income distribution as measured by the Gini coefficient.

Suggested Citation

  • Stark, Oded & Kosiorowski, Grzegorz, 2025. "A Demarcation of the Gini Coefficient," IZA Discussion Papers 18045, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp18045
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    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • P46 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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