Gini coefficient versus top income shares – Pattern change differences

C.Y. Cyrus Chu and Yi-Ting Wang

Economics Letters, 2021, vol. 201, issue C

Abstract: It has been argued that the top income share index is better than the Gini coefficient to capture the recent deterioration of inequality. This paper derives a neat analytical formula for comparing the elasticities of the Gini index and the top income share index with respect to an increase in the income of the rich group, reflecting the recent trend. We then use data for France, Taiwan and the U.S. to illustrate the relative accuracy of the top income share index. When income increase applies to the very rich group, the elasticity difference between these two indexes can be as large as seven times.

Keywords: Gini coefficient elasticity; Top income share elasticity; Inequality deterioration; Country comparison (search for similar items in EconPapers)
JEL-codes: D31 D63 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:201:y:2021:i:c:s016517652100046x

DOI: 10.1016/j.econlet.2021.109769

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