Carmelo García Pérez

Using the Dagum model to explain changes in personal income distribution

This article studies the evolution of personal income distribution in Spain from 1995 to 2005 using the Dagum model. Dagums three parameter model (type I) provides a good fitting to empirical income distributions in Spain. Moreover, its parameters can be interpreted as economic indicators of income distribution changes. After studying the economic interpretation of the Dagum model parameters, we analyse the impact of parameter changes on different income percentiles and also on the evolution of inequality in Spain using data from the European Community Household Panel (ECHP) and the European Union Statistics on Income and Living Conditions (EU-SILC).

Welfare, Inequality and Poverty Rankings in the European Union using an Inference-Based Stochastic Dominance Approach

In a period of political change in the European Union, when the European Constitution is in the centre of the debate, the social convergence among European Union countries is a crucial issue. However, the measurement of welfare, inequality and poverty and the comparisons among countries are issues of great controversy. One of the main reasons for this is that implicit or explicit value judgements have to be made, and it is not easy to determine which of these value judgements are the most appropriate ones. In this paper we apply inference-based stochastic dominance methods to study welfare, inequality and poverty in European Union countries in 2000, applying purchasing power parities from the OECD. There are two main advantages of the methods and data used in this work: on the one hand, the stochastic method uses explicit and widely, though not universally, accepted assumptions, and if this small number of assumptions is accepted, the welfare and poverty ranking that the method provides is unambiguous. On the other hand, the use of the European Community Household Panel permits the comparisons in welfare, inequality and poverty among different countries using harmonised data. In addition, the use of inference tests permits a more precise ranking.