On the Estimation of the Global Income Distribution Using a Parsimonious Approach

Vanesa Jordá, José María Sarabia and Faustino Prieto

A chapter in Economic Well-Being and Inequality: Papers from the Fifth ECINEQ Meeting, 2014, vol. 22, pp 115-145 from Emerald Group Publishing Limited

Abstract: This paper aims to estimate the global income distribution during the nineties using limited information. In a first stage, we obtain national income distributions considering a model with two parameters. In particular, we propose to use the so-calledLamé distributions, which are curved versions of the Sigh-Maddala and Dagum distributions. The main feature of this family is that they represent parsimonious models which can fit income data adequately with just two parameters and whose Lorenz curves are characterized by only one parameter. In a second stage, global and regional distributions are derived from a finite mixture of these families using population shares. We test the validity of the model, comparing it with other two-parameter families. Our estimates of different inequality measures suggest that global inequality presents a decreasing pattern mainly driven by the fall of the differences across countries during the course of the study period that offsets the increase in disparities within countries.

Keywords: Limited information; Singh-Maddala and Dagum distributions; Gini index; national income distribution; regional income distribution; C13; C18; D31 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:eme:reinzz:s1049-258520140000022003

DOI: 10.1108/S1049-258520140000022003

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