Modelling Inequality with a Single Parameter

J. M. Henle (), Nicholas Horton and S. J. Jakus
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J. M. Henle: Smith College
S. J. Jakus: Smith College

Chapter 14 in Modeling Income Distributions and Lorenz Curves, 2008, pp 255-269 from Springer

Abstract: Abstract We argue that the Lorenz curve for income is well-modelled by members of the one-parameter family of functions: $$ \left\{ {y = \left( {1 - \left( {1 - r} \right)^k } \right)^{\frac{1}{k}} } \right\} $$ . We justify this statement with data from the Luxembourg Income Study. The family of curves arises from a dynamic model of income growth, in which the parameter k has a direct economic interpretation.

Keywords: Single Parameter; Sensitivity Factor; Income Growth; Lorenz Curve; Aggregate Income (search for similar items in EconPapers)
Date: 2008
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DOI: 10.1007/978-0-387-72796-7_14

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