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Gini coefficient versus top income shares – Pattern change differences

Author

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  • Chu, C.Y. Cyrus
  • Wang, Yi-Ting

Abstract

It has been argued that the top income share index is better than the Gini coefficient to capture the recent deterioration of inequality. This paper derives a neat analytical formula for comparing the elasticities of the Gini index and the top income share index with respect to an increase in the income of the rich group, reflecting the recent trend. We then use data for France, Taiwan and the U.S. to illustrate the relative accuracy of the top income share index. When income increase applies to the very rich group, the elasticity difference between these two indexes can be as large as seven times.

Suggested Citation

  • Chu, C.Y. Cyrus & Wang, Yi-Ting, 2021. "Gini coefficient versus top income shares – Pattern change differences," Economics Letters, Elsevier, vol. 201(C).
    • Handle: RePEc:eee:ecolet:v:201:y:2021:i:c:s016517652100046x
    DOI: 10.1016/j.econlet.2021.109769
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    References listed on IDEAS

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    1. Alvaredo, Facundo, 2011. "A note on the relationship between top income shares and the Gini coefficient," Economics Letters, Elsevier, vol. 110(3), pages 274-277, March.
    2. Anthony Atkinson & Thomas Piketty, 2007. "Top incomes over the twentieth century: A contrast between continental european and english-speaking countries," Post-Print halshs-00754859, HAL.
    3. Atkinson, A. B. & Piketty, Thomas (ed.), 2007. "Top Incomes Over the Twentieth Century: A Contrast Between Continental European and English-Speaking Countries," OUP Catalogue, Oxford University Press, number 9780199286881.
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    More about this item

    Keywords

    Gini coefficient elasticity; Top income share elasticity; Inequality deterioration; Country comparison;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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