Estimating Multi-Modality and Inflection in Wealth Disparity

47 Pages Posted: 15 Jan 2019

See all articles by Damien Parker

Damien Parker

The New School - Department of Economics

Willi Semmler

The New School - Department of Economics; Universitaet Bielefeld; IIASA

Date Written: January 2, 2019

Abstract

This paper demonstrates how kernel density estimation and non-convergent inflection point identification contribute towards the study of wealth disparity. Measuring the dispersion of non-convergent paired inflection points taken from density estimates of the log of net wealth reveals multi-modal sub-distributions. The methodology overcomes shortcomings in the Gini measure of inequality and demonstrates an analytical framework for examining economic inequality. This approach is applied to U.S. data as well as estimating bi-modality within German incomes revealing sub-populations with extreme variations of economic, financial and demographic variables through identifying inflection points as the density is smoothed through increased iterations of the bandwidth.

Keywords: density derivatives, varied bandwidths, combined density estimates, inflection points, multi-modality, economic inequality

JEL Classification: C10, C14

Suggested Citation

Parker, Damien and Semmler, Willi, Estimating Multi-Modality and Inflection in Wealth Disparity (January 2, 2019). Available at SSRN: https://ssrn.com/abstract=3312949 or http://dx.doi.org/10.2139/ssrn.3312949

Damien Parker (Contact Author)

The New School - Department of Economics ( email )

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New York, NY 10003
United States

Willi Semmler

The New School - Department of Economics ( email )

65 Fifth Avenue
New York, NY 10003
United States

HOME PAGE: http://www.newschool.edu/nssr/faculty/?id=4e54-6b79-4e41-3d3d

Universitaet Bielefeld ( email )

Universit├Ątsstra├če 25
Bielefeld, NRW
Germany

IIASA ( email )

Schlossplatz 1
Laxenburg/Austria, A-2361
Austria

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