Statistical Inference with Generalized Gini Indices of Inequality, Poverty, and Welfare

Abstract

This article considers statistical inference for consistent estimators of generalized Gini indices of inequality, poverty, and welfare. Our method does not require grouping the population into a fixed number of quantiles. The empirical indices are shown to be asymptotically normally distributed using functional limit theory. Easily computed asymptotic variance expressions are obtained using influence functions. Inference based on first-order asymptotics is then compared with the grouped method and various bootstrap methods in simulations and with U.S. income data. The bootstrap-t method based on our asymptotic theory is found to have superior size and power properties in small samples.