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Title: A Note on the Relationship between Top Income Shares and the Gini Coefficient

Author(s): Facundo Alvaredo

Publication Date: October 2010

Keyword(s): Gini coefficient, Pareto distribution and top income shares

Programme Area(s): Public Economics

Abstract: When a very top group of the income distribution, infinitesimal in numbers, owns a finite share S of total income, the Gini coefficient G can be approximated by G*(1 - S) + S, where G* is the Gini coefficient for the rest of the population. We provide a simple formal proof for this expression, give a general formula of the relationship when the top group is not infinitesimal, and offer two applications as illustrations.

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Bibliographic Reference

Alvaredo, F. 2010. 'A Note on the Relationship between Top Income Shares and the Gini Coefficient'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8071