Applying Generalized Pareto Curves to Inequality Analysis
AbstractA generalized Pareto curve is defined as the curve of inverted Pareto coefficients b(p), where b(p) is the ratio between average income or wealth above rank p and the p-th quantile. We present this concept and show how it can be used to better estimate distributions, especially from tax tabulations. By providing a simple decomposition of top shares, we discuss how studying inverted Pareto coefficients can improve the understanding of inequality dynamics. We also show how it helps to better analyze wealth and income concentrations along the distribution, using data for France, Spain, the United States, and China.
CitationBlanchet, Thomas, Bertrand Garbinti, Jonathan Goupille-Lebret, and Clara Martínez-Toledano. 2018. "Applying Generalized Pareto Curves to Inequality Analysis." AEA Papers and Proceedings, 108: 114-18. DOI: 10.1257/pandp.20181075
- D31 Personal Income, Wealth, and Their Distributions
- D63 Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration
- P36 Socialist Institutions and Their Transitions: Consumer Economics; Health; Education and Training: Welfare, Income, Wealth, and Poverty