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Consistent nonparametric tests for Lorenz dominance

Accepted version
Peer-reviewed

Type

Article

Change log

Authors

Barrett, GF 
Donald, SG 
Bhattacharya, Debopam  ORCID logo  https://orcid.org/0000-0002-2870-7898

Abstract

This article proposes consistent nonparametric methods for testing the null hypothesis of Lorenz dominance. The methods are based on a class of statistical functionals defined over the difference between the Lorenz curves for two samples of welfare-related variables. We present two specific test statistics belonging to the general class and derive their asymptotic properties. As the limiting distributions of the test statistics are nonstandard, we propose and justify bootstrap methods of inference. We provide methods appropriate for case where the two samples are independent as well as the case where the two samples represent different measures of welfare for one set of individuals. The small sample performance of the two tests is examined and compared in the context of a Monte Carlo study and an empirical analysis of income and consumption inequality.

Description

Keywords

49 Mathematical Sciences, 38 Economics, 4905 Statistics, 3802 Econometrics, 10 Reduced Inequalities

Journal Title

Journal of Business and Economic Statistics

Conference Name

Journal ISSN

0735-0015
1537-2707

Volume Title

32

Publisher

Informa UK Limited

Rights

All rights reserved