# Income inequality in Romania: The exponential-Pareto distribution

*Bogdan Oancea* (),
*Tudorel Andrei* () and
*Dan Pirjol*

*Physica A: Statistical Mechanics and its Applications*, 2017, vol. 469, issue C, 486-498

**Abstract:**
We present a study of the distribution of the gross personal income and income inequality in Romania, using individual tax income data, and both non-parametric and parametric methods. Comparing with official results based on household budget surveys (the Family Budgets Survey and the EU-SILC data), we find that the latter underestimate the income share of the high income region, and the overall income inequality. A parametric study shows that the income distribution is well described by an exponential distribution in the low and middle incomes region, and by a Pareto distribution in the high income region with Pareto coefficient α=2.53. We note an anomaly in the distribution in the low incomes region (∼9,250 RON), and present a model which explains it in terms of partial income reporting.

**Keywords:** Income distribution; Inequality; Pareto distribution; Kolmogorov–Smirnov test (search for similar items in EconPapers)

**Date:** 2017

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**Persistent link:** https://EconPapers.repec.org/RePEc:eee:phsmap:v:469:y:2017:i:c:p:486-498

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