nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2007‒11‒03
three papers chosen by
Maximo Rossi
University of the Republic

  1. Inequality Measures as Tests of Fairness in an Economy By Ravi Kanbur; Stuart Sayer; Andy Snell
  2. Wealth Concentration over the Path of Development: Sweden, 1873–2005 By Roine, Jesper; Waldenström, Daniel
  3. Non-Hierarchical Bivariate Decomposition of Theil Indexes By Kam Ki Tang; Dennis Petrie

  1. By: Ravi Kanbur; Stuart Sayer; Andy Snell
    Abstract: Standard measures of inequality have been criticized for a long time on the grounds that they are snap shot measures which do not take into account the process generating the observed distribution. Rather than focusing on outcomes, it is argued, we should be interested in whether the underlying process is “fair”. Following this line of argument, this paper develops statistical tests for fairness within a well defined income distribution generating process and a well specified notion of “fairness”. We find that standard test procedures, such as LR, LM and Wald, lead to test statistics which are closely related to standard measures of inequality. The answer to the “process versus outcomes” critique is thus not to stop calculating inequality measures, but to interpret their values differently–to compare them to critical values for a test of the null hypothesis of fairness.
    Date: 2007–10–26
  2. By: Roine, Jesper (Stockholm School of Economics); Waldenström, Daniel (Research Institute of Industrial Economics (IFN))
    Abstract: We study the development of wealth concentration in Sweden over 130 years, from the beginning of industrialization until present day. Our series are based on a wide array of new evidence from estate- and wealth tax data, estimates of foreign and domestic family firm-wealth and of pension and social security wealth. We find that the Swedish wealth concentration was at a historically high level in the agrarian state and that it did not change much during early industrialization. From World War I up until about 1950, the richest percentile lost ground to the rest of the top wealth decile where relatively income rich households accumulated new wealth. In the postwar period, the entire top decile lost out relative to the rest of the population, much due to the spread of owner-occupied housing. Around 1980, wealth compression stopped and inequality increased. We introduce new ways of approximating the effects of international flows and find that the recent increase in Swedish wealth inequality is likely to be larger than what official estimates suggest.
    Keywords: Wealth concentration; Wealth distribution; Inequality; Income distribution; Sweden; Welfare state; Pension wealth; Augmented wealth
    JEL: D14 D31 N33 N34
    Date: 2007–10–16
  3. By: Kam Ki Tang; Dennis Petrie (CEPA - School of Economics, The University of Queensland)
    Abstract: This paper develops a method to conduct non-hierarchical bivariate decomposition of Theil indexes. The method has the merits that, first, it treats all variates symmetrically and therefore facilitates the comparison of inequalities associated with different variates; and, second, it highlights the interaction between variates in the creation of inequality. The method is applied to measure gender and ethnic income inequality in Australia.
    Date: 2007

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