Policy Support and Governance

Charting Income Inequality. The Lorenz Curve. EASYPol Series 000

Tool

This analytical tool explains how to build Lorenz Curves for income distributions and discusses their use for inequality measurement. A short conceptual background, a step-by-step procedure and a simple numerical example illustrate how to calculate and draw Lorenz Curves. A discussion on the use of Lorenz Curves to represent inequality is also provided. It highlights that the Lorenz Curve is one of the most used ways of representing income distributions in empirical works thanks to its immediate comparability with a “natural” benchmark, the Equidistribution line, representing the most egalitarian distribution. The concepts of Lorenz dominance and intersection of Lorenz Curves are also discussed. Furthermore, the appendix provides a detailed presentation of the properties of the Lorenz Curves.

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This paper is part of a FAO Policy series: EASYPol-Resources for policy making (in agriculture, rural development and food security). To find all EASYPol series' resources, go to the Policy Support and Governance website, Resources page and type "EASYPol" in the free text search.

Published: 2005
Publisher: Bellu, L.G., Liberati, P.
Geography: Global