DP8071 A Note on the Relationship between Top Income Shares and the Gini Coefficient
|Publication Date:||October 2010|
|Date Revised:||February 2011|
|Keyword(s):||Gini coefficient, Pareto distribution, top income shares|
|Programme Areas:||Public Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=8071|
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.