Income distribution and inequality measurement: the problem of extreme values

Frank Cowell () and Emmanuel Flachaire

Cahiers de la Maison des Sciences Economiques from Université Panthéon-Sorbonne (Paris 1)

Abstract: We examine the statistical performance of inequality indices in the presence of extreme values in the data and show that these indices are very sensitive to the properties of the income distribution. Estimation and inference can be dramatically affected, especially when the tail of the income distribution is heavy, even when standard bootstrap methods are employed. However, use of appropriate methods for modelling the upper tail can greatly improve the performance of even those inequality indices that are normally considered particularly sensitive to extreme values

Keywords: Inequality measures; statistical performance; robustness (search for similar items in EconPapers)
JEL-codes: C1 D63 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2004-07
New Economics Papers: this item is included in nep-ecm and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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ftp://mse.univ-paris1.fr/pub/mse/cahiers2004/V04101.pdf (application/pdf)

Related works:
Journal Article: Income distribution and inequality measurement: The problem of extreme values (2007)
Working Paper: Income distribution and inequality measurement: The problem of extreme values (2007)
Working Paper: Income distribution and inequality measurement: The problem of extreme values (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:wpsorb:v04101

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