Taylor & Francis Group
Browse
ubes_a_1647214_sm7735.pdf (217.44 kB)

Improved Nonparametric Bootstrap Tests of Lorenz Dominance

Download (217.44 kB)
journal contribution
posted on 2019-07-25, 16:30 authored by Zhenting Sun, Brendan K. Beare

One income or wealth distribution is said to Lorenz dominate another when the Lorenz curve for the former is nowhere below that of the latter, indicating a (weakly) more equitable allocation of resources. Existing tests of the null of Lorenz dominance based on pairs of samples of income or wealth achieve the nominal rejection rate asymptotically when the two Lorenz curves are equal, but are conservative at other null configurations. We propose new nonparametric bootstrap tests of Lorenz dominance based on preliminary estimation of a contact set. Our tests achieve the nominal rejection rate asymptotically on the boundary of the null; that is, when Lorenz dominance is satisfied, and the Lorenz curves coincide on some interval. Numerical simulations indicate that our tests enjoy substantially improved power compared to existing procedures at relevant sample sizes. Supplementary materials for this article are available online.

History

Usage metrics

    Journal of Business & Economic Statistics

    Licence

    Exports

    RefWorks
    BibTeX
    Ref. manager
    Endnote
    DataCite
    NLM
    DC