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For further information about this series and for press inquiries please contact Lubala Chibwe, by email: l.chibwe@lse.ac.uk.
Ramses H. Abul Naga and Tarik Yalcin
To date, inequality orderings for ordered response data are only suitable for comparing distributions that share a common median state. In this paper we propose a methodology for comparing distributions irrespective of t...Read more...
October 2010
Ralph Bayer and Frank A Cowell
Firms are usually better informed than tax authorities about market conditions and the potential profits of competitors. They may try to exploit this situation by underreporting their own taxable profits. The tax authori...Read more...
September 2010
Frank A Cowell, Emmanuel Flachaire and Sanghamitra Bandyopadhyay
Specific functional forms are often used in economic models of distributions; goodness-of-fit measures are used to assess whether a functional form is appropriate in the light of real-world data. Standard approaches use ...Read more...
April 2009
Frank A Cowell and Carlo V. Fiorio
We show how classic source-decomposition and subgroup-decomposition methods can be reconciled with regression methodology used in the recent literature. We also highlight some pitfalls that arise from uncritical use of t...Read more...
Kristof Bosmans and Frank A Cowell
We provide a parsimonious axiomatisation of the complete class of absolute nequality indices. Our approach uses only a weak form of decomposability and does not require a priori that the measures be differentiable. ...Read more...
February 2009
Ramses H. Abul Naga and Karine Lamiraud
According to the catastrophic health expenditure methodology a household is in catastrophe if its health out-of-pocket budget share exceeds a critical threshold. We develop a conceptual framework for addressing three que...Read more...
November 2008
Ramses H. Abul Naga
We use the delta method to derive the large sample distribution of multidimensional inequality indices. We also present a simple method for computing standard errors and obtain explicit formulas in the context of two fam...Read more...
August 2008
Pedro Gomes and François Pouget
This paper argues that the governmental decisions on corporate tax and public capital stock are not independent. In order to explain this relationship, we have built a general equilibrium model of corporate tax competiti...Read more...
March 2008
Sanghamitra Bandyopadhyay and Joan Esteban
We introduce a model of redistributive income taxation and public expenditure. This joint treatment permits analyzing the interdependencies between the two policies: one cannot be chosen independently of the other. Empir...Read more...
December 2009
Frank A Cowell
What are the principal issues on which research on income distribution and inequality focus? How might that focus shift in the immediate future? Prepared for the The Elgar Handbook of Socio-Economics....Read more...
October 2007
Wulf Gaertner, Frank A Cowell and Yoram Amiel
We examine individuals' distributional orderings in a number of contexts. This is done by using a questionnaire-experiment that is presented to respondents in any one of seven “flavours” or interpretations of the basic d...Read more...
When health status is an ordered response variable, Allison and Foster (2004) postulate that a distribution Q ?exhibits more inequality than a distribution P ?if Q ?is obtained from P ?via a sequence of median preserving...Read more...
June 2007
Frank A Cowell and Maria-Pia Victoria-Feser
Modelling Lorenz curves (LC) for stochastic dominance comparisons is central to the analysis of income distribution. It is conventional to use non-parametric statistics based on empirical income cumulants which are in th...Read more...
March 2007
Yoram Amiel, Frank A Cowell and Xavier Ramos
Starting from the axiomatisation of polarisation contained in Esteban and Ray (1994) and Chakravarty and Majumdar (2001) we investigate whether people’s perceptions of income polarisation is consistent with the key axiom...Read more...
Sanghamitra Bandyopadhyay and Frank A Cowell
In this paper we examine the concept of 'vulnerability' (Townsend 1994) within the context of income mobility of the poor. We test for the dynamics of vulnerable households in the UK using Waves 1 - 12 of the British Hou...Read more...
February 2007
Frank A Cowell and Udo Ebert
Using a simple axiomatic structure we characterise two classes of inequality indices - absolute and relative - that take into account “envy” in the income distribution. The concept of envy incorporated here concerns the ...Read more...
December 2006
Kazutoshi Miyazawa
This paper investigates the relationship between growth and inequality from a demographic point of view. In an extended model of the accidental bequest with endogenous fertility, we analyze the effects of a decrease in o...Read more...
This article provides a brief overview of the key issues in inequality measurement and has been prepared for inclusion in the second edition of The New Palgrave....Read more...
August 2006
Yoram Amiel, Frank A Cowell and Wulf Gaertner
According to standard theory founded on Harsanyi (1953, 1955) a social welfare function can be appropriately based on the individual’s approach to choice under uncertainty. We investigate whether people really do rank di...Read more...
June 2006
Recent insights from the philosopher Larry Temkin have suggested a new basis for the measurement of income inequality, founded on the notion of individual complaints. about income distribution. Under certain specificatio...Read more...
February 2006
Ramses H. Abul Naga and Pierre-Yves Geoffard
We provide, for the class of relative bidimensional inequality indices, a decomposition of inequality into two univariate Atkinson-Kolm-Sen indices and a third statistic which depends on the joint distribution of resourc...Read more...
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We focus on a relatively neglected area of the tax-compliance literature in economics, the behaviour of firms. We examine the impact of alternative audit rules on receipts from a tax on profits in the context of strategi...Read more...
Miguel Sanchez
When fairly homogeneous taxpayers are affected by common income shocks, a tax agency’s optimal auditing strategy consists of auditing a low-income declarer with a probability that (weakly) increases with the other taxpay...Read more...
In this paper we examine the concept of “vulnerability” within the context of income mobility of the poor. We test for the dynamics of vulnerable households in the UK using Waves 1 - 12 of the British Household Panel Stu...Read more...
Carlo V. Fiorio
This paper suggests overcoming some limitations of traditional inequality decomposition methods by developing a combination of Burtless (1999) and DiNardo et al. (1996), two different microsimulation methods for decompos...Read more...
Elena Bárcena-Martín and Frank A Cowell
We focus on the statics and dynamics of poverty in Spain using data from the first eight waves of the European Community Household Panel from 1994 to 2001, a period not sufficiently covered by recent literature. The resu...Read more...
January 2006
Guillermo Cruces
This paper studies poverty as a dynamic phenomenon, motivated by the recurring economic crises that affect developing countries and the incidence of income fluctuations on household welfare. While the increasing availabi...Read more...
July 2005
This paper investigates the relationship between growth and inequality from a demographic point of view. In an extended model of the accidental bequest with endogenous fertility, we analyze the effects of a decrease in t...Read more...
Sanghamitra Bandyopadhyay
We examine associations of mass media and information and communications technologies (ICT) as knowledge-based infrastructures on some economic development outcomes. We .nd that several mass media and ICT penetration var...Read more...
Rafael Hortala-Vallve and Miguel Sanchez
We analyze the contracting structure in a moral hazard setting with several agents where output is produced jointly and is the only contractible variable. Since the salary of each agent is a function of all agents effort...Read more...
September 2005
Guillermo Cruces and Quentin Wodon
Relying on a Constant Relative Risk Aversion utility function, we use panel data for Argentina to compute risk-adjusted income and poverty measures and to analyze their determinants. Taking risk into account increases po...Read more...
September 2003
This paper documents the impact of Argentina's recent economic crises on different aspects of poverty, with a special focus on the economic collapse of 2002. We discuss the methodology of poverty measurement in Argentina...Read more...
July 2003
Frank A Cowell and Guillermo Cruces
Building on previous studies on perceptions of inequality, welfare and risk we investigate the structure of individuals' rankings of uncertain prospects in terms of risk and their relationship to individual preferences. ...Read more...
May 2003
This paper documents the convergence of incomes across Indian states over the period 1965 to 1998. It departs from traditional analyses of convergence by tracking the evolution of the entire income distribution, instead ...Read more...
March 2003
The tax-payer-as-gambler (TAG) model of tax non-compliance is the classic vehicle for providing some simple insights. Under fairly general conditions this model supports the following four propositions: (1) if the rate o...Read more...
Yoram Amiel, Frank A Cowell, Leima Davidovitz and Avraham Polovin
It is known from the literature on uncertainty that in cases where individuals express a preference for a high win-probability bet over a bet with high winnings they nevertheless will bid more to obtain the bet with high...Read more...
Ceema Zahra Namazie
Despite large falls in output in the FSU, rather than firing workers, workers were subjected to long spells of unpaid leave or non-payment of wages (wage arrears). Wage arrears is a significant problem in the countries o...Read more...
November 2002
The early 1990s saw the rapid introduction of policies that were to reform the centrally planned economies in CEE and FSU. These policies were expected to lead to improvements in welfare. Studies on the transition projec...Read more...
Ramses H. Abul Naga and Frank A Cowell
The 'prediction approach' proposed by Dearden, Machin and Reed (DMR) consists in (1) regressing the observed incomes of the child and parent families on separate sets of predetermined variables, and (2) regressing the ch...Read more...
September 2002
Temkin (1986,1993) sets out a philosophical basis for the analysis of income inequality that provides an important alternative to the mainstream welfarist approach. We show that the Temkin principles can be characterised...Read more...
March 2002
Frank A Cowell and Emmanuel Flachaire
We examine the sensitivity of estimates and inequality indices to extreme values, in the sense of their robustness properties and of their statistical performance. We establish that these measures are very sensitive to t...Read more...
Kurt Devooght
This paper examines how people assess inequality of an income distribution and how inequality could be measured. We start from philosophical analysis of L Temkin who distinguishes nine plausible aspects of inequality. Hi...Read more...
January 2002
Russell Davidson and Emmanuel Flachaire
Various versions of the wild bootstrap are studied as applied to regression models with heteroskedastic errors. It is shown that some versions can be qualified as 'tamed', in the sense that the statistic bootstrapped is ...Read more...
February 2001
Maria-Pia Victoria-Feser
With income distributions it is common to encounter the problem of missing data. When a parametric model is fitted to the data, the problem can be overcome by specifying the marginal distribution of the observed data. Wi...Read more...
January 2001
Yoram Amiel and Frank A Cowell
Orderings of income distribution in terms of inequality should be closely related to orderings in terms of risk. Using a novel mult-country questgionnaire experiment we examine the basis for this claim in terms of respon...Read more...
June 2001
We examine the relationship between risk analysis and inequality analysis, using a questionnaire-experimental approach .The experiments focus on the effect of income transformations on the perceived rankings of income di...Read more...
July 2001
Averaging methods are routinely used in order to limit biases resulting from the mismeasurement of permanent incomes. The Solon/Zimmerman estimator regresses a single-year measurement of the child's resources on a T-peri...Read more...
Because the permanent incomes of parents and children are typically unobserved, the estimation of the intergenerational correlation via the use of proxy variables entails an errors-in-variables bias. By solving a system ...Read more...
Daniele Checchi
In this paper we propose to measure inequality of educational achievements by constructing a Gini index on educational attainments. We then use the proposed measure to analyse the relationship between inequality in incom...Read more...
May 2001
Distributional dominance criteria are commonly applied to draw welfare inferences about comparisons, but conclusions drawn from empirical implementations of dominance criteria may be influenced by data contamination. We ...Read more...
August 2001
Lorenz curves and second-order dominance criteria are known to be sensitive to data contamination in the right tail of the distribution. We propose two ways of dealing with the problem: (1) Estimate Lorenz curves using p...Read more...
Christos Papatheodorou
This paper investigates the extent to which certain social characteristics and personal attributes could help explain income inequality in Greece. This analysis is quite revealing for understanding and explaining income ...Read more...
November 2000
Frank A Cowell and Stephen P Jenkins
The techniques of simple random sampling are seldom appropriate in the empirical analysis of income distributions. Various types of weighting schemes are usually required either from the point of view of welfare-economic...Read more...
June 2000
We show how a collection of results in the literature on the empirical estimation of welfare indicators from sample data can be unified. We also demonstrate how some of these ideas can be extended to empirically importan...Read more...
December 1999
Kurt Devooght and Erik Schokkaert
Recently many philosophers and social choice theorists have questioned traditional welfare egalitarianism by introducing a notion of responsibility. They propose to distinguish between two sets of individual characterist...Read more...
June 1999
Frank A Cowell, Julie Litchfield and Magda Mercader-Prats
Inequality comparisons between countries and over time should take into account problems of data imperfection. We examine the contrasting experience of the UK and spain during the 1980s in terms of the distribution of di...Read more...
The estimation of the intergenerational correlation of incomes is usually carried out by proxying permanent incomes using suitable indicators of economic status, and by treating the resulting measurement error problem us...Read more...
July 1999
Leima Davidovitz and Yoram Kroll
Inequality aversion and risk aversion are widely assumed features of economic models. But a review of the literature revealed that inequlity aversion and risk aversion are treated as separate variables. This paper presen...Read more...
March 1999
Wulf Gaertner and Jochen Jungeilges
The theoretical background of the empirical investigations to be reported in this paper are positionalist aggregation functions which are numerically representable. More concretely, the broad Borda rule is proposed as an...Read more...
Francisco H.G. Ferreira and Julie Litchfield
This paper investigates possible explanations for the increases in inequality observed in Brazil during the 1980s. While the static decompositions of inequality by household characteristics reveal that education and race...Read more...
July 1998
Ceema Zahra Namazie and Peter Sanfey
We analyse self-reported measures of satisfaction with life in a transition country, Kyrgyzstan, using 1993 household survey data. We test whether higher levels of satisfaction are associated with greater economic well-b...Read more...
This paper employs a decomposition analysis of inequality by income source to understand and explain particular aspects of income inequality in Greece. The results suggest that entrepreneurial income is the most signific...Read more...
Yoram Amiel
Inequality measurement involves explicit or implicit value judgements. The subjective approach to inequality measurement is a relatively new and fast-developing area which focueses direct attention on these judgements. I...Read more...
June 1998
Frank A Cowell and Christian Schluter
The performance of two broad classes of mobility indices is examined when allowance is made for the possibility of data contamination. Single-stage indices – those that are applied directly to a sample from a multivariat...Read more...
The analysis of inequality is placed in the context of recent developments in economics and statistics. Prepated for Handbook of Income Distribution, edited by A B Atkinson and F Bourguignon....Read more...
Lorenz curves and associated tools for ranking income distributions are commonly estimated on the assumption that full, unbiased samples are available. However, it is common to find income and wealth distributions that a...Read more...
The theory of functional equations is used to clarify the relationship between equilibrium distributions of wealth and population parameters such as the distribution of families by size, marriage patterns, tax mechanisms...Read more...
May 1998
Udo Ebert
The paper presents an abstract definition of linear inequality concepts leading to linearly invariant inequality measures and characterizes the class of linear concepts completely. Two general methods of deriving ethical...Read more...
November 1997
Ramses H. Abul Naga and Robin Burgess
This paper is about the determination and prediction of permanent income in household data. Standard static welfare indicators (e.g. per capita expenditure and income) are imperfect in this respect as they typically cont...Read more...
We contrast two approaches to the prediction of latent variables in the model of factor analysis. The likelihood statistic is a sufficient statistic for the unobservables when sampling arises from the exponential family ...Read more...
Christian Schluter
The intra-distributional mobility of German income dynamics is analysed using GSOEP. Transition probabilities are found to be time-varying. The tested models comprise various mixed Markov chains in discrete time and a no...Read more...
April 1997
We establish a general relationship between the standard form of the individualistic social-welfare function and the ?reduced-form? version that is expressed in terms of inequality and mean income. This shows the relatio...Read more...
The paper analyses the performance of unemployment benefit systems in a search-theoretic framework. The criteria of evaluation comprise the alleviation of poverty and the reduction in income inequality, whilst the divers...Read more...
Frank A Cowell and Magda Mercader-Prats
Instead of Inequality analysis sometimes neglects the problem of allowing differences in people's non-income characteristics in the comparison of income distribution, I would say, At the heart of any distributional analy...Read more...
(not published)
Inequality measures are powerful tools of applied welfare analysis. However, to use the tools effectively one has to take into account the characteristics of the data with which one usually has to work. These raise a num...Read more...
October 1996
We examine the way in which across-the-board additions to incomes are perceived to change inequality. Using a questionnaire we investigate whether subjective inequality rankings correspond to the principle of scale-indep...Read more...
January 1997
This paper analyses the evolution of inequality and poverty in Brazil during the 1980s, using a large repeated cross-section household survey data set. We calculate standard scalar measures of inequality and poverty, tog...Read more...
August 1996
Ana Rute Cardosa
An extensive micro data set matching firms, establishments and their employees, is used to study the determinants of earnings inequality in Portugal and its evolution from 1983 to 1992, with the Theil index, its decompos...Read more...
Frank A Cowell, Francisco H.G. Ferreira and Julie Litchfield
Using a newly available comprehensive micro-data set we examine changes in the shape of the Brazilian income distribution during the 'lost decade' of the 1980s. We adopt alternative parametric and non-parametric approach...Read more...
March 1996
Mercedes Prieto Alaiz and Maria-Pia Victoria-Feser
This paper presents a robust estimation of two income distribution models using Spanish data for the period 1990-91 under three different concepts of income. The effect on the estimates of the Theil index due to the choi...Read more...
June 1996
Elvezio Ronchetti and Maria-Pia Victoria-Feser
An important aspect of income distribution is the modelling of the data using an appropriate parametric model. This involves estimating the parameters of the models, given the data at hand. Income data are typically in g...Read more...
Choosing between two income distribution models typically involves testing two non-tested hypotheses, that is hypotheses such that one cannot be obtained as a special or limiting case of the other. Cox (1961, 1962) propo...Read more...
Using the GSOEP the paper analyses income mobility and inequality dynamics in Germany in the 90s at various levels of aggregation, ranging from a direct modelling of intra-distributional mobility using bivariate kernel d...Read more...
Non-parametric kernel density estimates are employed for an exploratory analysis of the distributional conseuqnces of the German tax-benefit system using GSOEP. The focuses is on the year 1991 and a detailed analysis is ...Read more...
Olga Cantó-Sánchez
Even if individuals care about their current economic status, they are mainly concerned about the time they remain in it (its duration). The expected duration of an economic status affects how individuals perceive it and...Read more...
February 1996
We examine the specification and interpretation of the transfer principle in analysing income distributions. The early work by Pigou and Dalton on this topic left open the possibility of a variety of specifications and i...Read more...
January 1996
The economic analysis of income distribution and related topics makes extensive use of dominance criteria to draw inferences about welfare comparisons. However it is possible that - just as some inequality statistics can...Read more...
When families reform there are implications for the income distribution through a number of economic mechanisms: income sharing, changes in household need, reweighting the distribution. These changes are distinct from th...Read more...
Robert K von Weizsäcker
Starting from a simple, descriptive model of individual income, an explicit link between the age composition of a population and the personal distribution of incomes is established. Demographic effects on income inequali...Read more...
June 1995
We consider the problem of targeting benefits when the incomes of families are not accurately observable by the public authorities. By income uncertainty it is meant that the decision-maker cannot ascertain an applicant'...Read more...
May 1995
The standard approach to the study of poverty assumes the existence of an ideal variable that captures the extent of deprivation. In this paper we postulate that poverty is involved with many dimensions. We use a latent ...Read more...
June 1994
Drawing on recent work concerning the statistical robustness of inequality statistics we examine the sensitivity of poverty indices to data contamination using the concept of the influence function. We show that poverty ...Read more...
May 1994
We develop two simple measures of how much inequality is explained by individual population characteristics or groups of characteristics, analogous to R2 in regression analysis. We investigate the measures' empirical imp...Read more...
We examine the implications of three similar criteria that are commonly used in welfare economics and the analysis of inequality and poverty - income dominance, monotonicity and the Pareto principle - within the context ...Read more...
October 1993
We re-examine some of the standard axioms used in the literature on Poverty Measurement. Using a sample of 486 students from Australia, Israel and the USA we investigate the extent to which perceptions of poverty corresp...Read more...
July 1994
Statistical problems in modelling personal income distributions include estimation procedures, testing and model choice. Typically, the parameters of a given model are estimated by classical procedures such as maximum li...Read more...
Stephen Howes
The second-order stochastic dominance criterion for inequality analysis introduced by Atkinson (1970) covers nearly all well-known inequality indices. The same cannot be said, in respect of poverty indices, for the secon...Read more...
Researchers in many fields of economics often compare distributions using some criterion or another of inequality, poverty or welfare. It is standard practice to base such comparative analysis on aggregated data. But wil...Read more...
Inequality measures are often used to summarise information about empirical income distributions. However , the resulting picture of the distribution and of the changes in the distribution can be severely distorted if th...Read more...