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The absolute Gini is a more reliable measure of inequality for time dependent analyses (compared with the relative Gini)

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  • Bandyopadhyay, Sanghamitra

Abstract

I compare time series properties of relative and absolute Ginis to examine which one is better suited for time dependent analyses. In particular, I model Gini trends as a fractionally integrated process and find that there are more mean-reverting absolute Ginis than relative Ginis suggesting that absolute Ginis may be better suited than relative Ginis for time-dependent analyses. I then undertake an estimation of the inequality-growth relationship using popular panel regression methods and find that the absolute Gini is negatively and significantly associated with growth for most models estimated, but none for the relative Gini. I deduce that from an empirical point of view, the absolute Gini may be a better choice when undertaking time dependent analyses.

Suggested Citation

  • Bandyopadhyay, Sanghamitra, 2018. "The absolute Gini is a more reliable measure of inequality for time dependent analyses (compared with the relative Gini)," Economics Letters, Elsevier, vol. 162(C), pages 135-139.
    • Handle: RePEc:eee:ecolet:v:162:y:2018:i:c:p:135-139
    DOI: 10.1016/j.econlet.2017.07.012
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    References listed on IDEAS

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    Cited by:

    1. Thu K. Hoang & Klarizze Anne Martin Puzon & Hoai Thi Thu Dang & Rachel M. Gisselquist, 2024. "Inequality and institutional outcomes in Viet Nam: A combined principal components and clustering analysis," WIDER Working Paper Series wp-2024-38, World Institute for Development Economic Research (UNU-WIDER).
    2. Abebe Hailemariam & Sefa Awaworyi Churchill & Russell Smyth & Kingsley Tetteh Baako, 2021. "Income inequality and housing prices in the very long‐run," Southern Economic Journal, John Wiley & Sons, vol. 88(1), pages 295-321, July.

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    More about this item

    Keywords

    Relative Gini; Absolute Gini; Fractionally integrated processes; Inequality and growth relationship; Gini coefficient;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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