Abstract
Lorenz curves and Generalised Entropy (GE) measures are popular tools for analyzing income inequality. This paper seeks to connect these techniques by demonstrating that GE inequality measures may be derived directly from the Lorenz curve. The paper provides analytical expressions for Theil’s T and L inequality measures, half the square of the coefficient of variation and Atkinson’s utility based measure in terms of the Lorenz curve. Mathematical expressions for common GE measures are derived for three simple parametric specifications. The results are empirically illustrated and shown to be consistent with Lorenz dominance.
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Rohde, N. (2008). Lorenz Curves and Generalised Entropy Inequality Measures. In: Chotikapanich, D. (eds) Modeling Income Distributions and Lorenz Curves. Economic Studies in Equality, Social Exclusion and Well-Being, vol 5. Springer, New York, NY. https://doi.org/10.1007/978-0-387-72796-7_15
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DOI: https://doi.org/10.1007/978-0-387-72796-7_15
Publisher Name: Springer, New York, NY
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