6.2.2. The Gini Coefficient in the Case of the Pareto Distribution
The corresponding Gini coefficient, labeled G, is the concentration ratio applied to income distribution and is defined as:
(6.3)
Re-arranging and simplifying the terms yields a coefficient depending only on the parameter δ:
(6.4)
Clearly, the α coefficients will be used again to compute the Gini coefficients as δ = 1 – 1/α. As there are as many α coefficients as income brackets, we are able to average a value of α for each state in each year.
We now turn to the application to the United States from 1965 to 2003.
6.2.2. The Gini Coefficient in the Case of the Pareto Distribution
The corresponding Gini coefficient, labeled G, is the concentration ratio applied to income distribution and is defined as:
(6.3)
Re-arranging and simplifying the terms yields a coefficient depending only on the parameter δ:
(6.4)
Clearly, the α coefficients will be used again to compute the Gini coefficients as δ = 1 – 1/α. As there are as many α coefficients as income brackets, we are able to average a value of α for each state in each year.
We now turn to the application to the United States from 1965 to 2003.