Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/95606
Authors: 
Dagsvik, John K.
Jia, Zhiyang
Vatne, Bjørn H.
Zhu, Weizhen
Year of Publication: 
2011
Series/Report no.: 
LIS Working Paper Series 568
Abstract: 
Mandelbrot (1960) proposed using the so-called Pareto-Lévy class of distributions as a framework for representing income distributions. We argue in this paper that the Pareto-Lévy distribution is an interesting candidate for representing income distribution because its parameters are easy to interpret and it satisfies a specific invariance-under-aggregation property. We also demonstrate that the Gini coefficient can be expressed as a simple formula of the parameters of the Pareto-Lévy distribution. We subsequently use wage and income data for Norway and seven other OECD countries to fit the Pareto- Lévy distribution as well as the Generalized Beta type II (GB2) distribution. The results show that the Pareto-Lévy distribution fits the data better than the GB2 distribution for most countries, despite the fact that GB2 distribution has four parameters whereas the Pareto-Lévy distribution has only three.
Subjects: 
stable distributions
Pareto-Lévy distribution
income distributions
invariance principles
Generalized Beta distributions
JEL: 
C21
C46
C52
D31
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size
147.18 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.