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Modelling Inequality with a Single Parameter

  • J. M. Henle
  • N. J. Horton
  • S. J. Jakus
Part of the Economic Studies in Equality, Social Exclusion and Well-Being book series (EIAP, volume 5)

Abstract

We argue that the Lorenz curve for income is well-modelled by members of the one-parameter family of functions:
$$ \left\{ {y = \left( {1 - \left( {1 - r} \right)^k } \right)^{\frac{1}{k}} } \right\} $$
. We justify this statement with data from the Luxembourg Income Study. The family of curves arises from a dynamic model of income growth, in which the parameter k has a direct economic interpretation.

Keywords

Single Parameter Sensitivity Factor Income Growth Lorenz Curve Aggregate Income 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer Science+Business Media, LLC 2008

Authors and Affiliations

  • J. M. Henle
    • 1
  • N. J. Horton
    • 1
  • S. J. Jakus
    • 1
  1. 1.Department of Mathematics and StatisticsSmith CollegeUSA

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