A Note on the Relationship Between Top Income Shares and the Gini Coefficient
By Facundo Alvaredo. 2010
193 citations recorded by the source corpus.
When a very top group of the income distribution, infinitesimal in numbers, owns a finite share S of total income, the Gini coefficient G can be approximated by G*(1 - S) + S, where G* is the Gini coefficient for the rest of the population. We provide a simple formal proof for this expression, give a general formula of the relationship when the top group is not infinitesimal, and offer two applications as illustrations.
Subfields: Economics and Econometrics, Sociology and Political Science
View Paper: https://www.semanticscholar.org/paper/2a1deac8d959da353d84817b2138b50e0f2ece94
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Economics and Econometrics
- Leonardo Gasparini
- Charalambos G. Tsangarides
- Jonathan D. Ostry
- Andrew Berg
- Facundo Alvaredo
- Robert V. Breunig
- Omer Majeed
- Giray Gozgor
In Sociology and Political Science
Citations in the corpus
- Recent trends in inequality and poverty in developing countries (2013, background): “…low enforcement and multiple legal ways to avoid the tax.30 A number of researchers have addressed the differences in the ability of tax and survey data to represent income inequality, trying to reconcile the evidence using the two sources (see Alvaredo, 2011; Burkhauser et al., 2012 for the US).”
- Inequality and Labor Market Institutions (2015, unknown): “…economies, as the statistic is more affected by the underreporting of top incomes than the tax returns data used to construct top income shares (Alvaredo, 2011; Burkhauser and others, 2012).3 Notwithstanding this limitation, the Gini effectively captures changes below the 9th decile of the…”
- Redistribution, Inequality, and Growth (2014, background): “…available, but the Gini is relatively insensitive to movements at the tail of the distribution, partly because the richest households tend to be underrepresented in the household surveys used to measure it (Alvaredo, 2011). not hold in any particular country or even for the whole group over time.”
- Pareto Models, Top Incomes, and Recent Trends in UK Income Inequality (2017, unknown): “(2016) apply Approach B in a more extensive and comprehensive manner and use World Top Incomes Database (Alvaredo et al. 2015) estimates of top income shares as a benchmark. Bach et al. (2009) is an application to Germany.”