The Relationship between the Equivalence Scale and the Inequality Index and Its Impact on the Measurement of Income Inequality

Masato Okamoto

MPRA Paper from University Library of Munich, Germany

Abstract: The paper discusses the ∪-shaped relationship between the equivalence scale n^ε and the Gini index instead of considering the equivalence scale’s relationship to the generalised entropy measures, which was studied by Coulter, et al. (1992). An end-point condition is given for the ∪-shaped relationship, which corresponds to a condition for that of the generalised entropy measures. Additionally, using a mixture of log-normal distributions approach, five factors are shown to be required for a convex relationship between size elasticity and the Gini index. Empirically, income distributions satisfy those factors. Thus, the end-point condition essentially determines the shape of the relationship.

Keywords: inequality; income distribution; equivalence scale (search for similar items in EconPapers)
JEL-codes: D31 D63 (search for similar items in EconPapers)
Date: 2012-03-12
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: The Relationship between the Equivalence Scale and the Inequality Index and its Impact on the Measurement of Income Inequality (2012)
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