A new formulation of the Dagum distribution in terms of income inequality and poverty measures

Filippo Domma, Francesca Condino and Sabrina Giordano

Physica A: Statistical Mechanics and its Applications, 2018, vol. 511, issue C, 104-126

Abstract: We provide new formulations of the Dagum family (Dagum, 1977), widely appreciated to model the income distribution, by making its parameters directly interpretable in terms of income median, inequality and poverty measures. The novelty is that the new distributions still belong to the class of Dagum distributions and enjoy its properties, but more the new parameters have a clear economic meaning. So the effects of determinants can be evaluated, directly and simultaneously, on measures of strategic relevance. This may be attractive since it helps policy makers to determine the appropriate response to the determinants of inequality and poverty. The peculiarities of three special cases are discussed and exemplified on real data from the Survey on Household Income and Wealth provided by the Bank of Italy.

Keywords: Income distribution; Inequality and poverty measures; Heterogeneity; Lorenz curve; Gini index (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:511:y:2018:i:c:p:104-126

DOI: 10.1016/j.physa.2018.07.027

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