A Note on Gary Fields' Index of Income Inequality

JEL Classification D31, D63

Paolo Figini

Department of Economics, Trinity College, Dublin 2, Ireland.

Abstract

This paper is an assessment of the approach suggested by Gary Fields for measuring inequality in an economy with high-income sector enlargement. This approach describes the change in inequality according to a U-pattern, instead of the inverted U-pattern described by other indices. We argue that Fields index is not consistent with Lorenz Dominant Criterion (LDC) because of its failure to adequately describe the distributive change due to rank preserving transfers. The properties of Fields' index and of the modified version of the index F2, the behaviour, the originality and the limits of this approach in inequality measurement are tested and briefly discussed.

Acknowledgements

Research for this work has been carried out during a period as visiting researcher at Michigan State University and during my M.Litt. studies at Trinity College. I am really grateful to G. Vaggi and W.J. Samuels who made this work possible and helped me with their comments. I have also benefited from comments given by G. Fields, B. Nolan, F. O'Toole, S. Targetti Lenti and two anonymous referees. I am grateful to the University of Pavia for supporting this work with a post-degree studentship "Borsa di studio per il perfezionamento all'estero, Area scienze economico-statistiche".