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Population Changes and the Measurement of Inequality

Author

Listed:
  • Lidia Ceriani

    (Georgetown University)

  • Paolo Verme

    (The World Bank)

Abstract

Population changes in countries with little natural growth tend to occur via migration channels and among poorer individuals such as refugees and economic migrants, or richer individuals such as international white collar workers or global entrepreneurs. These migratory flows are increasing in size, they are difficult to capture in censuses and surveys, and they potentially bias the measurement of inequality. This paper provides a formal treatment of the impact of population changes on the measurement of inequality when changes occur to the extremes of an income distribution. It provides the conditions under which inequality is expected to increase or decrease and determines the relative importance of including or excluding selected observations at the top or at the bottom. An application to US data illustrates the mathematical results and shows that including or excluding observations from the extremes can bias the measurement of inequality significantly.

Suggested Citation

  • Lidia Ceriani & Paolo Verme, 2022. "Population Changes and the Measurement of Inequality," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 162(2), pages 549-575, July.
    • Handle: RePEc:spr:soinre:v:162:y:2022:i:2:d:10.1007_s11205-021-02849-7
    DOI: 10.1007/s11205-021-02849-7
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    More about this item

    Keywords

    Bottom incomes; Income distributions; Income inequality; Migration; Top incomes;
    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
    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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