A Study of Income Stability in the Czech Republic by Finite Mixtures

Jitka Bartošová and Nicholas T. Longford

Prague Economic Papers, 2014, vol. 2014, issue 3, 330-348

Abstract: Income, expenditure and similar variables in monetary units tend to have distributions similar to log-normal. Description of such variables after logarithmic transformation by the normal model is often not accurate enough, especially for multivariate data. Deviations of their empirical distributions from the theoretical lognormal distribution often require more sophisticated analysis. Mixtures represent a very flexible way of reconstructing complex distributions with irregular features and are suitable for detailed modelling. Multivariate mixture models are applied to the Czech longitudinal survey of household income in the European Union Statistics on Income and Living Conditions (EU-SILC) in 2005-2008. The analysis identifies distinct patterns of progression of income, with a high percentage of households having steady annual increases over the four years (three transitions). Graphical presentation of the results is emphasised.

Keywords: income distribution; Equivalised household income; EU-SILC; longitudinal analysis; multivariate mixtures; stability (search for similar items in EconPapers)
JEL-codes: C33 C38 H31 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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DOI: 10.18267/j.pep.487

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