Income inequality in Romania: The exponential-Pareto distribution
Abstract
We present a study of the distribution of the gross personal income and income inequality in Romania, using individual tax income data, and both non-parametric and parametric methods. Comparing with official results based on household budget surveys (the Family Budgets Survey and the EU-SILC data), we find that the latter underestimate the income share of the high income region, and the overall income inequality. A parametric study shows that the income distribution is well described by an exponential distribution in the low and middle incomes region, and by a Pareto distribution in the high income region with Pareto coefficient α = 2.53. We note an anomaly in the distribution in the low incomes region (∼9,250 RON), and present a model which explains it in terms of partial income reporting.
- Publication:
-
Physica A Statistical Mechanics and its Applications
- Pub Date:
- March 2017
- DOI:
- 10.1016/j.physa.2016.11.094
- Bibcode:
- 2017PhyA..469..486O
- Keywords:
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- Income distribution;
- Inequality;
- Pareto distribution;
- Kolmogorov-Smirnov test