Abstract
ABSTRACT. The distribution of above‐median income groups can be described accurately by OLS regression of the Pareto distribution. The excellent fit of log‐linear regression has led some researchers to conclude that extrapolated income measures in the open end of the distribution are reliable. The analysis of income distribution data for metropolitan areas reveals: (1) that OLS tends to consistently overestimate the number of families in the tail, and (2) that the overestimation can have serious implications for hypothesis testing.
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