Charting Income Inequality: The Lorenz Curve

Lorenzo Bellù and Paolo Liberati

MPRA Paper from University Library of Munich, Germany

Abstract: This paper explains how to build Lorenz Curves for income distributions and discusses their use for inequality measurement. A short conceptual background, a step-by-step procedure and a simple numerical example illustrate how to calculate and draw Lorenz Curves. A discussion on the use of Lorenz Curves to represent inequality is also provided. It highlights that the Lorenz Curve is one of the most used ways of representing income distributions in empirical works thanks to its immediate comparability with a “natural” benchmark, the Equidistribution line, representing the most egalitarian distribution. The concepts of Lorenz dominance and intersection of Lorenz Curves are also discussed. Furthermore, the appendix provides a detailed presentation of the properties of the Lorenz Curves.

Keywords: Lorenz curves; income distribution; inequality measures; Lorenzo dominance; equidistribution line; inequality; poverty (search for similar items in EconPapers)
JEL-codes: A13 C02 D30 D31 D61 D63 E64 H22 H23 H53 I30 I31 I32 I38 J4 J5 (search for similar items in EconPapers)
Date: 2005-11-01
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:30063

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