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Robust Lorenz Curves: A Semi-Parametric Approach

Cowell, Frank
Publication London, 2001
Collection DARP discussion paper; 50
Description 27 p.
Abstract 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 parametric models for income distributions, and (2) Combine empirical estimation with a parametric (robust) estimation of the upper tail of the distribution using the Pareto model. Approach (2) is preferred because of its flexibility. Using simulations we show the dramatic effect of a few contaminated data on the Lorenz ranking and the performance of the robust approach (2). Statistical inference tools are also provided.
Keywords Welfare dominanceLorenz curvePareto modelMestimators
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COWELL, Frank, VICTORIA-FESER, Maria-Pia. Robust Lorenz Curves: A Semi-Parametric Approach. 2001 https://archive-ouverte.unige.ch/unige:6620

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Deposited on : 2010-05-18

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