IDEAS home Printed from https://ideas.repec.org/a/eee/phsmap/v514y2019icp686-698.html
   My bibliography  Save this article

Entropy based European income distributions and inequality measures

Author

Listed:
  • Villas-Boas, Sofia B.
  • Fu, Qiuzi
  • Judge, George

Abstract

In this paper, instead of likelihood based methods that are fragile under model uncertainty, we use entropy based methods on time-ordered household income data to recover income distribution information on European countries and obtain an inequality income measure. For information recovery, we use a family of information theoretic entropy divergence measures to obtain income probability density functions and the corresponding inequality measures, which reflect how European country based economic behavioral systems are performing, and in terms of dynamics have changed over time.

Suggested Citation

  • Villas-Boas, Sofia B. & Fu, Qiuzi & Judge, George, 2019. "Entropy based European income distributions and inequality measures," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 514(C), pages 686-698.
    • Handle: RePEc:eee:phsmap:v:514:y:2019:i:c:p:686-698
    DOI: 10.1016/j.physa.2018.09.121
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0378437118312548
    Download Restriction: Full text for ScienceDirect subscribers only. Journal offers the option of making the article available online on Science direct for a fee of $3,000
    File URL: https://libkey.io/10.1016/j.physa.2018.09.121?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Roine, Jesper & Waldenström, Daniel, 2014. "Long-Run Trends in the Distribution of Income and Wealth," Working Paper Series 1021, Research Institute of Industrial Economics.
    2. Golan, Amos & Judge, George G. & Miller, Douglas, 1996. "Maximum Entropy Econometrics," Staff General Research Papers Archive 1488, Iowa State University, Department of Economics.
    3. Thomas Piketty & Emmanuel Saez, 2014. "Inequality in the long run," PSE-Ecole d'économie de Paris (Postprint) halshs-01053609, HAL.
    4. repec:hal:pseose:halshs-00847231 is not listed on IDEAS
    5. A. Drăgulescu & V.M. Yakovenko, 2001. "Evidence for the exponential distribution of income in the USA," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 20(4), pages 585-589, April.
    6. Facundo Alvaredo & Anthony Atkinson & Thomas Piketty & Emmanuel Saez, 2013. "The Top 1% in International and Historical Perspective," Post-Print halshs-00847231, HAL.
    7. James B. McDonald, 2008. "Some Generalized Functions for the Size Distribution of Income," Economic Studies in Inequality, Social Exclusion, and Well-Being, in: Duangkamon Chotikapanich (ed.), Modeling Income Distributions and Lorenz Curves, chapter 3, pages 37-55, Springer.
    8. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality in the United States, 1913–1998," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 1-41.
    9. Judge,George G. & Mittelhammer,Ron C., 2012. "An Information Theoretic Approach to Econometrics," Cambridge Books, Cambridge University Press, number 9780521869591, September.
    10. Duangkamon Chotikapanich & William E. Griffiths & Gholamreza Hajargasht & Wasana Karunarathne & D. S. Prasada Rao, 2018. "Using the GB2 Income Distribution," Econometrics, MDPI, vol. 6(2), pages 1-24, April.
    11. Duangkamon Chotikapanich & William E. Griffiths & Gholamreza Hajargasht & Wasana Karunarathne & D.S. Prasada Rao, 2018. "Using the GB2 Income Distribution: A Review," Department of Economics - Working Papers Series 2036, The University of Melbourne.
    12. Moshe Levy & Sorin Solomon, 1996. "Power Laws Are Logarithmic Boltzmann Laws," International Journal of Modern Physics C (IJMPC), World Scientific Publishing Co. Pte. Ltd., vol. 7(04), pages 595-601.
    13. Facundo Alvaredo & Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2013. "The Top 1 Percent in International and Historical Perspective," Journal of Economic Perspectives, American Economic Association, vol. 27(3), pages 3-20, Summer.
    14. Judge,George G. & Mittelhammer,Ron C., 2012. "An Information Theoretic Approach to Econometrics," Cambridge Books, Cambridge University Press, number 9780521689731, September.
    15. repec:hal:pseose:halshs-01053609 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Judge, George, 2023. "Information Recovery in Complex Economic Systems," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt4jj70102, Department of Agricultural & Resource Economics, UC Berkeley.
    2. G.-Fivos Sargentis & Theano Iliopoulou & Panayiotis Dimitriadis & Nikolaos Mamassis & Demetris Koutsoyiannis, 2021. "Stratification: An Entropic View of Society’s Structure," World, MDPI, vol. 2(2), pages 1-22, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Atanu Ghoshray & Issam Malki & Javier Ordóñez, 2022. "On the long-run dynamics of income and wealth inequality," Empirical Economics, Springer, vol. 62(2), pages 375-408, February.
    2. Jordá, Vanesa & Niño-Zarazúa, Miguel, 2019. "Global inequality: How large is the effect of top incomes?," World Development, Elsevier, vol. 123(C), pages 1-1.
    3. Villas-Boas, Sofia B & Fu, Jenny & Judge, George, 2016. "Measuring The Inequality Nature Of European Micro Income Data," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt6445w1s5, Department of Agricultural & Resource Economics, UC Berkeley.
    4. Vladimir Hlasny, 2021. "Parametric representation of the top of income distributions: Options, historical evidence, and model selection," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1217-1256, September.
    5. Richard V. Burkhauser & Nicolas Hérault & Stephen P. Jenkins & Roger Wilkins, 2016. "What has Been Happening to UK Income Inequality Since the Mid-1990s? Answers from Reconciled and Combined Household Survey and Tax Return Data," NBER Working Papers 21991, National Bureau of Economic Research, Inc.
    6. Holger M. Mueller & Paige P. Ouimet & Elena Simintzi, 2015. "Wage Inequality and Firm Growth," LIS Working papers 632, LIS Cross-National Data Center in Luxembourg.
    7. Terhi Ravaska, 2018. "Top incomes and income dynamics from a gender perspective: Evidence from Finland 1995-2012," Working Papers 469, ECINEQ, Society for the Study of Economic Inequality.
    8. Mehdi El Herradi & Jakob Haan & Aurélien Leroy, 2023. "Inflation and the Income Share of the Rich: Evidence for 14 OECD Countries," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 69(1), pages 170-194, March.
    9. Terhi Ravaska, 2018. "Top incomes and income dynamics from a gender perspective: Evidence from Finland 1995–2012," Working Papers 321, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    10. Mehdi el Herradi & Jakob de Haan & Aurélien Leroy, 2020. "Inflation and the Income Share of the Rich: Evidence for 12 OECD Countries," CESifo Working Paper Series 8203, CESifo.
    11. Boschini, Anne & Gunnarsson, Kristin & Roine, Jesper, 2020. "Women in top incomes – Evidence from Sweden 1971–2017," Journal of Public Economics, Elsevier, vol. 181(C).
    12. Alain Trannoy, 2015. "Inequality and welfare: Is Europe special?," Working Papers 384, ECINEQ, Society for the Study of Economic Inequality.
    13. Frank A. Cowell & Philippe Kerm, 2015. "Wealth Inequality: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 671-710, September.
    14. Yasunori Fujita, 2015. "Missing equation in Piketty’s r-g theory," Economics and Business Letters, Oviedo University Press, vol. 4(2), pages 57-62.
    15. Arčabić, Vladimir & Kim, Kyoung Tae & You, Yu & Lee, Junsoo, 2021. "Century-long dynamics and convergence of income inequality among the US states," Economic Modelling, Elsevier, vol. 101(C).
    16. Ravaska Terhi, 2018. "Top incomes and income dynamics from a gender perspective : Evidence from Finland 1995-2012," Working Papers 1822, Tampere University, Faculty of Management and Business, Economics.
    17. repec:iae:iaewps:wp2016n5 is not listed on IDEAS
    18. Estrada, Fernando, 2015. "Antinomies de Le Capital au XXIe siècle [Antinomies of Capital in the 21st Century]," MPRA Paper 61126, University Library of Munich, Germany.
    19. Miguel Henry & George Judge, 2019. "Permutation Entropy and Information Recovery in Nonlinear Dynamic Economic Time Series," Econometrics, MDPI, vol. 7(1), pages 1-16, March.
    20. Bjorn Bartling & Alexander Cappelen & Mathias Ekström & Erik Ø. Sørensen & Bertil Tungodden, 2018. "Fairness in Winner-Take-All Markets," Working Papers 2018-031, Human Capital and Economic Opportunity Working Group.
    21. Rolf Aaberge & Anthony B. Atkinson & Sebastian Königs, 2018. "From classes to copulas: wages, capital, and top incomes," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(2), pages 295-320, June.

    More about this item

    Keywords

    Income probability distribution function; Micro income data; Information theoretic methods; Cressie–Read divergence; Entropy maximization; Pareto’s law; (PDFs);
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:phsmap:v:514:y:2019:i:c:p:686-698. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/physica-a-statistical-mechpplications/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.