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The Inequality We Want: How Much is too Much?

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  • Krozer Alice

Abstract

A key aspect defining the contemporary income distribution is the (increasing) share the top holds compared to the rest. This paper shows that income concentration increases towards the very top of the distribution, while the shares the middle- and upper-middle-income groups hold, remain stable across countries and over time. Traditional indicators less sensitive to changes at the extremes of the distribution might obscure inequality.s actual dimension, and thus help perpetuate it. To avoid this, the ratio of the income share of the top 5 per cent over that of the bottom 40 per cent, denominated Palma v.2, could function as a complementary indicator for the measurement of inequality.

Suggested Citation

  • Krozer Alice, 2015. "The Inequality We Want: How Much is too Much?," WIDER Working Paper Series 015, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:wp2015-015
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    File URL: https://www.wider.unu.edu/sites/default/files/wp2015-015.pdf
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    References listed on IDEAS

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    1. Christoph Lakner & Branko Milanovic, 2016. "Global Income Distribution: From the Fall of the Berlin Wall to the Great Recession," World Bank Economic Review, World Bank Group, vol. 30(2), pages 203-232.
    2. Alex Cobham & Andrew Sumner, 2013. "Is it all about the tails? The Palma measure of income inequality," Working Papers 308, ECINEQ, Society for the Study of Economic Inequality.
    3. 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.
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    Cited by:

    1. repec:eee:phsmap:v:483:y:2017:i:c:p:423-437 is not listed on IDEAS
    2. Periklis Gogas & Rangan Gupta & Stephen M. Miller & Theophilos Papadimitriou & Georgios Antonios Sarantitis, 2015. "Income Inequality: A State-by-State Complex Network Analysis," Working Papers 201534, University of Pretoria, Department of Economics.
    3. Ivan Gonzalez & Budy P Resosudarmo, 2016. "A sectoral growth-income inequality nexus in Indonesia," Departmental Working Papers 2016-15, The Australian National University, Arndt-Corden Department of Economics.

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