On the Measurement of Intermediate Inequality: A Dominance Criterion for a Ray-Invariant Notion
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 introduces a unit-consistent Lorenz dominance criterion that allows ranking income distributions according to centrist measures à la Seidl and Pfingsten (1997). In doing so, it defines α-Lorenz curves that generalize the absolute Lorenz curve. These curves allow implementing unanimous rankings for a broad set of centrist inequality notions, whereas they become closer and closer to the absolute curve when α approaches equity. In addition, this paper provides an empirical illustration of these tools using Australian income data. The results suggest that despite the reduction of relative inequality for Australian-born people between 1999 and 2003, their inequality increased for most centrist value judgments.
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Acknowledgements
Acknowledgment
Financial support from the Ministerio de Ciencia e Innovación (grants ECO2011-23460, ECO2010-21668-C03-03, and ECO2013-46516-C4-2-R), Xunta de Galicia (CN2012/178), and from FEDER is gratefully acknowledged. We want to thank Coral del Río for helpful comments.
Citation
Azpitarte, F. and Alonso-Villar, O. (2014), "On the Measurement of Intermediate Inequality: A Dominance Criterion for a Ray-Invariant Notion", Economic Well-Being and Inequality: Papers from the Fifth ECINEQ Meeting (Research on Economic Inequality, Vol. 22), Emerald Group Publishing Limited, Leeds, pp. 401-420. https://doi.org/10.1108/S1049-258520140000022013
Publisher
:Emerald Group Publishing Limited
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