Title: What happened to the distribution of income in Puerto Rico during the last three decades of the XX Century? A statistical point of view.
Abstract:Nowadays, methodological and technological innovations allow us to easily perform statistical tests on the significance of changes between inequality indices across places or time. The use of the boot...Nowadays, methodological and technological innovations allow us to easily perform statistical tests on the significance of changes between inequality indices across places or time. The use of the bootstrapping techniques allows us to define sampling distributions for the inequality indices for which asymptotic distributions are difficult to derive due to their nonlinear nature. This technique presents a statistically sound way to test the significance of the differences in inequality indices. This paper contributes to the existing literature by combining three key elements that allow a comprehensive view of inequality changes overtime in Puerto Rico. First, It compares changes in household income with changes in household earnings between 1970 and 2000. Second, it uses different inequality measures selected according their sensitivity to changes in different parts of the income distribution. This analysis is important as a starting point to the study of why inequality changes overtime. Third, the statistical significance of changes in inequality overtime is tested using the bootstrapping technique to derive an empirical distribution for each of the inequality measures. This thirty years period between 1970 and 2000 has been selected given the availability of the data, since it corresponds to the period for which micro data from the Census Bureau is available for Puerto Rico. The degree of inequality is measured by the Gini Coefficient and by three alternative specifications of the Atkinson Index. Total household income and total household earnings are adjusted for family size. In the case of household income, it is clear that inequality decreased during the 70’s and increased during the 90’s. Nevertheless, during the 1980’s the changes were much smaller and the direction of the changes depends on the index used. The degree of inequality in the distribution of household earnings demonstrates significant increases through the 1970’s and 1990’s. In the 1970’s the increase in earnings inequality significantly affected the entire distribution, specially the lower part. To the contrary, inRead More
Publication Year: 2004
Publication Date: 2004-01-01
Language: en
Type: article
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Cited By Count: 4
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