Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/21224
Authors: 
Jäntti, Markus
Jenkins, Stephen P.
Year of Publication: 
2001
Series/Report no.: 
IZA Discussion paper series 364
Abstract: 
This paper proposes a new approach for analyzing the relationship between macroeconomic factors and the income distribution. The conventional method of analysis is regression of summary inequality indices on variables such as the unemployment and inflation rates. Building on the lessons from recent advances in time-series econometrics, we suggest instead that one should first fit a parametric functional form to the income distribution for each year, and then model the time series of model parameters in terms of the macroeconomic factors. Inferences about the relationship between the income distribution and macroeconomic factors can be derived from the model estimates. We apply these methods to data from the United Kingdom for 1961-91, and contrast the results with those found using earlier methods.
Subjects: 
Income inequality
macro-economic conditions
unemployment
inflation
Singh-Maddala distribution
JEL: 
E6
C51
D31
Document Type: 
Working Paper

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