Estimating Inequality with Missing Incomes

Paolo Brunori (), Pedro Salas-Rojo () and Paolo Verme
Additional contact information
Paolo Brunori: LSE (III) & University of Florence
Pedro Salas-Rojo: LSE (III) & Complutense University
Authors registered in the RePEc Author Service: PEDRO SALAS ROJO, Jr.

No 616, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: The measurement of income inequality is affected by missing observations, especially if they are concentrated on the tails of an income distribution. This paper conducts an experiment to test how the different correction methods proposed by the statistical, econometric and machine learning literature address measurement biases of inequality due to item non response. We take a baseline survey and artificially corrupt the data employing several alternative non-linear functions that simulate patterns of income non-response, and show how biased inequality statistics can be when item non-responses are ignored. The comparative assessment of correction methods indicates that most methods are able to partially correct for missing data biases. Sample reweighting based on probabilities on non-response produces inequality estimates quite close to true values in most simulated missing data patterns. Matching and Pareto corrections can also be effective to correct for selected missing data patterns. Other methods, such as Single and Multiple imputations and Machine Learning methods are less effective. A final discussion provides some elements that help explaining these findings.

Keywords: D31; D63; E64; O15 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2022-07
New Economics Papers: this item is included in nep-big
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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http://www.ecineq.org/milano/WP/ECINEQ2022-616.pdf First version, 2022 (application/pdf)

Related works:
Working Paper: Estimating inequality with missing incomes (2022)
Working Paper: Estimating Inequality with Missing Incomes (2022)
Working Paper: Estimating Inequality with Missing Incomes (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:inq:inqwps:ecineq2022-616

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