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Choosing Measures of Inequality for Empirical Applications

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Abstract

This paper is concerned with the distribution of income and the problem of choosing summary measures of inequality for empirical applications. By introducing a simple transformation of the Lorenz curve one is led to three measures of inequality, which jointly prove to represent a fairly good approximation of the inequality in a distribution function and also yield essential information about the shape of the income distribution. The paper also demonstrates that this type of inequality measures have an explicit normative foundation as well as an attractive statistical/geometrical interpretation. Furthermore, it is shown that the measures' sensitivity to transfers depend on the shape of the income distribution.

Suggested Citation

  • Rolf Aaberge, 1995. "Choosing Measures of Inequality for Empirical Applications," Discussion Papers 158, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:158
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    File URL: http://www.ssb.no/a/publikasjoner/pdf/DP/dp_158.pdf
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    Cited by:

    1. Sverre Grepperud, 1997. "Soil Depletion Choices under Production and Price Uncertainty," Discussion Papers 186, Statistics Norway, Research Department.
    2. John K. Dagsvik & Bjørn H. Vatne, 1999. "Is the Distribution of Income Compatible with a Stable Distribution?," Discussion Papers 246, Statistics Norway, Research Department.
    3. Rolf Aaberge & Ugo Colombino, 1998. "Social Evaluation of Individual Welfare Effects from Income Taxation Empirical Evidence Based on Italian Data for Married Couples," Discussion Papers 230, Statistics Norway, Research Department.

    More about this item

    Keywords

    Measures of inequality; statistical and normative characterization of inequality.;

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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