Compositions vs Gini: A new metric to evaluate the effects of land-income disparities

Mauricio Velasquez

2016 Papers from Job Market Papers

Abstract: I show how compositional analysis developed in Geology is applied to the same data that are used to construct the Gini coefficient as a useful alternative to the Gini index to test specific hypothesis about the simultaneous interaction of classes (groups) in a multivariate regression environment. In this paper I propose using compositional analysis to study landownership dynamics as a productive alternative to the Land Gini. Specifically, I show that because identical Gini calculations result from drastically different land distributions it is wrong to narrow its interpretation to theories relating only the very rich and the very poor while ignoring the middle class. To illustrate this, I use cadastral longitudinal data from Colombia (capturing effects before and after local democratization) to compare results between identical multilevel longitudinal models in which the key independent variables are either balances calculated via compositions, or the land Gini coefficient. I show that even when the Gini is significantly correlated with developmental outcomes such as access to clean water and electricity, the most likely story is about a relatively stronger middle vs large landowning class.

JEL-codes: A C O (search for similar items in EconPapers)
Date: 2016-07-28
New Economics Papers: this item is included in nep-cse
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