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Income Distribution, Income Inequality and Life Cycle Effects - A Nonparametric Analysis for Switzerland

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  • Michael Gerfin

Abstract

This paper illustrates the use of nonparametric estimation techniques in the analysis of income distribution and income inequality with focus on identifying life cycle effects. I consider kernel estimates of the univariate income density and of the bivariate incomeage density. The income-age relationship is also explored by using kernel regression. It turns out that there is a strong concave relation. To analyze the degree of inequality I estimate age-conditional inequality measures nonparametrically. Employing inequality indices belonging to the class of General Entropy measures, which are additively decomposable by population subgroups, allows to compare the results with the traditional approach. It turns out that there is hardly any difference. About 12-15% of total inequality can be attributed to life cycle effects.

Suggested Citation

  • Michael Gerfin, 1994. "Income Distribution, Income Inequality and Life Cycle Effects - A Nonparametric Analysis for Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 130(III), pages 509-522, September.
    • Handle: RePEc:ses:arsjes:1994-iii-15
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    1. Michael Gerfin, 1994. "Income Distribution, Income Inequality and Life Cycle Effects - A Nonparametric Analysis for Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 130(III), pages 509-522, September.
    2. Lars Osberg, 1998. "Economic Insecurity," Discussion Papers 0088, University of New South Wales, Social Policy Research Centre.
    3. Paglin, Morton, 1975. "The Measurement and Trend of Inequality: A Basic Revision," American Economic Review, American Economic Association, vol. 65(4), pages 598-609, September.
    4. Jenkins, S., 1988. "The Measurement Of Economic Inequality," Papers 170, Australian National University - Department of Economics.
    5. Pudney, Stephen, 1993. "Income and Wealth Inequality and the Life Cycle: A Non-parametric Analysis for China," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 8(3), pages 249-276, July-Sept.
    6. Wolfgang HAERDLE & Marlene MUELLER, "undated". "Applied nonparametric smoothing techniques," Statistic und Oekonometrie 9303, Humboldt Universitaet Berlin.
    7. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
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    1. Michael Gerfin, 1994. "Income Distribution, Income Inequality and Life Cycle Effects - A Nonparametric Analysis for Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 130(III), pages 509-522, September.
    2. Florian Zainhofer, 2007. "Life Cycle Portfolio Choice: A Swiss Perspective," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 143(II), pages 187-238, June.
    3. Fernández Sánchez, Mª.P. & Hernández Bastida, A. & Sánchez González, C., 2004. "Análisis de los ingresos y gastos trimestrales de los hogares españoles usando la Verosimilitud empírica”1/Analysing Spanish Income and Expenditure Through Empirical Likelihood," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 22, pages 139-150, Abril.
    4. Patrick A. Puhani, 2005. "Relative Supply and Demand for Skills in Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 141(IV), pages 555-584, December.
    5. Nadja El Benni & Robert Finger & Stefan Mann & Bernard Lehmann, 2012. "The distributional effects of agricultural policy reforms in Switzerland," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 58(11), pages 497-509.

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