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Income distribution and inequality measurement: The problem of extreme values

Econometrics, 2007-12, Vol.141 (2), p.1044-1072 [Peer Reviewed Journal]

Distributed under a Creative Commons Attribution 4.0 International License ;ISSN: 0304-4076 ;ISSN: 2225-1146 ;EISSN: 1872-6895 ;EISSN: 2225-1146 ;DOI: 10.1016/j.jeconom.2007.01.001

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  • Title:
    Income distribution and inequality measurement: The problem of extreme values
  • Author: Cowell, Frank Alan ; Flachaire, Emmanuel
  • Subjects: Economics and Finance ; Humanities and Social Sciences ; Mathematics ; Statistics ; Statistics Theory
  • Is Part Of: Econometrics, 2007-12, Vol.141 (2), p.1044-1072
  • Description: We examine the statistical performance of inequality indices in the presence of extreme values in the data and show that these indices are very sensitive to the properties of the income distribution. Estimation and inference can be dramatically affected, especially when the tail of the income distribution is heavy, even when standard bootstrap methods are employed. However, use of appropriate semiparametric methods for modelling the upper tail can greatly improve the performance of even those inequality indices that are normally considered particularly sensitive to extreme values.
  • Publisher: Elsevier
  • Language: English
  • Identifier: ISSN: 0304-4076
    ISSN: 2225-1146
    EISSN: 1872-6895
    EISSN: 2225-1146
    DOI: 10.1016/j.jeconom.2007.01.001
  • Source: HAL SHS: Archive ouverte en Sciences de l'Homme et de la Société (Open Access)

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