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Quentin Wodon and Shlomo Yitzhaki
''Inequality and the accounting period''
( 2003, Vol. 4 No.36 )
Income inequality typically declines with the length of time taken into account for measurement. This note derives an exact analytical relationship between the accounting period and inequality as measured by the Gini index. The formal relationship is similar to the decomposition of the coefficient of variation. The methodology is illustrated with panel data on urban wages from Mexico. It is found that the effect of the accounting period on inequality is sensitive to the properties of the Gini correlations between the periodical incomes. Reporting this type of correlation enables the evaluation of the impact of the length of the accounting period on inequality.
JEL: D3 - Distribution: General
Manuscript Received : Sep 12 2003 Manuscript Accepted : Dec 06 2003

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