Consistent nonparametric tests for Lorenz dominance


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