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The absolute Gini is a more reliable measure of inequality for time dependent analyses (compared with the relative Gini)

Sanghamitra Bandyopadhyay

Economics Letters, 2018, vol. 162, issue C, 135-139

Abstract: I compare time series properties of relative and absolute Ginis to examine which one is better suited for time dependent analyses. In particular, I model Gini trends as a fractionally integrated process and find that there are more mean-reverting absolute Ginis than relative Ginis suggesting that absolute Ginis may be better suited than relative Ginis for time-dependent analyses. I then undertake an estimation of the inequality-growth relationship using popular panel regression methods and find that the absolute Gini is negatively and significantly associated with growth for most models estimated, but none for the relative Gini. I deduce that from an empirical point of view, the absolute Gini may be a better choice when undertaking time dependent analyses.

Keywords: Relative Gini; Absolute Gini; Fractionally integrated processes; Inequality and growth relationship; Gini coefficient (search for similar items in EconPapers)
JEL-codes: C32 D63 O11 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:ecolet:v:162:y:2018:i:c:p:135-139