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A Pricewise Method for Estimating the Lorenz Curve

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  • ZuXiang Wang
  • Russell Smyth

Abstract

We propose a piecewise method to estimate the Lorenz curve for grouped income data. Our illustrative application shows that the method can produce more plausible density estimates when the income distribution data has multiple peaks and the Lorenz curve cannot be modeled satisfactorily over the entire interval with a single Lorenz curve model.

Suggested Citation

  • ZuXiang Wang & Russell Smyth, 2015. "A Pricewise Method for Estimating the Lorenz Curve," Monash Economics Working Papers 05-15, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2015-05
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    File URL: http://www.buseco.monash.edu.au/eco/research/papers/2015/0515pricewisemethodwangsmyth.pdf
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    References listed on IDEAS

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    1. Ryu, Hang K. & Slottje, Daniel J., 1996. "Two flexible functional form approaches for approximating the Lorenz curve," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 251-274.
    2. Sarabia, J. -M. & Castillo, Enrique & Slottje, Daniel J., 1999. "An ordered family of Lorenz curves," Journal of Econometrics, Elsevier, vol. 91(1), pages 43-60, July.
    3. James Foster & Michael Wolfson, 2010. "Polarization and the decline of the middle class: Canada and the U.S," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(2), pages 247-273, June.
    4. Zuxiang Wang & Yew‐Kwang Ng & Russell Smyth, 2011. "A General Method For Creating Lorenz Curves," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(3), pages 561-582, September.
    5. Rohde, Nicholas, 2009. "An alternative functional form for estimating the Lorenz curve," Economics Letters, Elsevier, vol. 105(1), pages 61-63, October.
    6. José-María Sarabia & Enrique Castillo & Daniel J. Slottje, 2001. "An Exponential Family of Lorenz Curves," Southern Economic Journal, John Wiley & Sons, vol. 67(3), pages 748-756, January.
    7. Frank A. Cowell & Fatemeh Mehta, 1982. "The Estimation and Interpolation of Inequality Measures," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(2), pages 273-290.
    8. Nanak Kakwani, 1976. "On the Estimation of Income Inequality Measures from Grouped Observations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 43(3), pages 483-492.
    9. Chotikapanich, Duangkamon, 1993. "A comparison of alternative functional forms for the Lorenz curve," Economics Letters, Elsevier, vol. 41(2), pages 129-138.
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    Cited by:

    1. Liang Frank Shao & Melanie Krause, 2020. "Rising mean incomes for whom?," PLOS ONE, Public Library of Science, vol. 15(12), pages 1-20, December.
    2. Wang, Zheng-Xin & Zhang, Hai-Lun & Zheng, Hong-Hao, 2019. "Estimation of Lorenz curves based on dummy variable regression," Economics Letters, Elsevier, vol. 177(C), pages 69-75.

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    More about this item

    JEL classification:

    • C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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