Q-convergence with interquartile ranges

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

We introduce a new convergence concept 'Q-convergence' which defines convergence in national incomes as a shrinking interquartile range (IQR) of the national income distribution. Compared with the other convergence definitions in the literature, Q-convergence has the following advantages. First, IQR, which represents dispersion and inequality of the income distribution, is also closely linked to the two-group clustering with the lower and upper quartiles being the 'centers' of the two groups. Second, IQR is equivariant to increasing transformations and thus reconciles better conflicting empirical findings using level or log data. Third, IQR is insensitive to outliers, leading to robust statistical inferences. Panel data are analyzed to find that the absolute income gap between the poor and rich countries has increased in terms of IQR, but the widening gap is rather small and insignificant when compared with the income increase of the poor countries.

Original languageEnglish
Pages (from-to)1785-1806
Number of pages22
JournalJournal of Economic Dynamics and Control
Volume29
Issue number10
DOIs
Publication statusPublished - 2005 Oct 1

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Interquartile range
Income Distribution
Quartile
Robust Inference
Datalog
Panel Data
Shrinking
Statistical Inference
Equivariant
Outlier
Clustering

Keywords

  • Convergence of income
  • Panel data
  • Quantile

ASJC Scopus subject areas

  • Economics and Econometrics
  • Control and Optimization

Cite this

Q-convergence with interquartile ranges. / Kang, Sung Jin; Lee, Myoung-jae.

In: Journal of Economic Dynamics and Control, Vol. 29, No. 10, 01.10.2005, p. 1785-1806.

Research output: Contribution to journalArticle

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