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On the Estimation of the Global Income Distribution Using a Parsimonious Approach

Economic Well-Being and Inequality: Papers from the Fifth ECINEQ Meeting

ISBN: 978-1-78350-567-8, eISBN: 978-1-78350-556-2

Publication date: 30 September 2014

Abstract

This paper aims to estimate the global income distribution during the nineties using limited information. In a first stage, we obtain national income distributions considering a model with two parameters. In particular, we propose to use the so-called Lamé distributions, which are curved versions of the Sigh-Maddala and Dagum distributions. The main feature of this family is that they represent parsimonious models which can fit income data adequately with just two parameters and whose Lorenz curves are characterized by only one parameter. In a second stage, global and regional distributions are derived from a finite mixture of these families using population shares. We test the validity of the model, comparing it with other two-parameter families. Our estimates of different inequality measures suggest that global inequality presents a decreasing pattern mainly driven by the fall of the differences across countries during the course of the study period that offsets the increase in disparities within countries.

Keywords

Acknowledgements

Acknowledgments

The authors thank the Ministerio de Economía y Competitividad (Project ECO2010-15455) and the Ministerio de Educación (AP2010-4907) for partial support of this work. Authors are grateful for the constructive suggestions provided by the reviewers, which improved the paper substantially.

Citation

Jordá, V., Sarabia, J.M. and Prieto, F. (2014), "On the Estimation of the Global Income Distribution Using a Parsimonious Approach", Economic Well-Being and Inequality: Papers from the Fifth ECINEQ Meeting (Research on Economic Inequality, Vol. 22), Emerald Group Publishing Limited, Bingley, pp. 115-145. https://doi.org/10.1108/S1049-258520140000022003

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Emerald Group Publishing Limited

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