Measuring Inequality from Top to Bottom

Bibliographic Data

ID19940247
AuthorsTania Diaz-Bazan (corresponding author)
Year2015
Publication date2015-04-01
Open AccessNo
TypeBOOK
PublisherWorld Bank, Washington, DC (PUBLISHER)
DOI10.1596/1813-9450-7237
OpenAlexW1939287728
LanguageEN
Citations received8
References cited3

This paper presents a new methodology to \n measure inequality that optimally combines household survey \n information and tax records to construct a complete income \n distribution. Combining the two data sources is necessary \n because, on the one hand, household surveys do not \n accurately represent the wealthiest segment of the \n population, while tax records do; on the other hand, the \n opposite is true for the lower end of the income \n distribution: tax records only include incomes above a \n certain threshold. The key innovation of the proposed \n methodology—and the main difference from the existing \n literature—is the choice of an optimal income threshold b. \n The Gini coefficient for the population is then computed \n combining the conditional income distributions for incomes \n below b (using household survey data) and above b (using tax \n records). Central to this methodology is the fact that b is \n not chosen arbitrarily: it should be determined in such a \n way as to minimize reliance on household survey data to \n compute the top of the income distribution. In practice, the \n optimal b corresponds to the minimum income level that \n triggers mandatory tax filing. The proposed methodology is \n applied to the case of Colombia

Inequality · Mathematical analysis · Programming language · Top-down and bottom-up design · Computer Science · Economic Theory and Policy · Economics of Agriculture and Food Markets · Geology · Income, Poverty, and Inequality · Mathematics

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