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Parametric quantile regression for income data

Helton Saulo, Roberto Vila, Giovanna V. Borges, Marcelo Bourguignon

arXiv 13 Jul 2022 · Statistics — Methodology

arXiv:2207.06558 · PDF · DOI · OpenAlex · Extracted main text

Abstract

Univariate normal regression models are statistical tools widely applied in many areas of economics. Nevertheless, income data have asymmetric behavior and are best modeled by non-normal distributions. The modeling of income plays an important role in determining workers' earnings, as well as being an important research topic in labor economics. Thus, the objective of this work is to propose parametric quantile regression models based on two important asymmetric income distributions, namely, Dagum and Singh-Maddala distributions. The proposed quantile models are based on reparameterizations of the original distributions by inserting a quantile parameter. We present the reparameterizations, some properties of the distributions, and the quantile regression models with their inferential aspects. We proceed with Monte Carlo simulation studies, considering the maximum likelihood estimation performance evaluation and an analysis of the empirical distribution of two residuals. The Monte Carlo results show that both models meet the expected outcomes. We apply the proposed quantile regression models to a household income data set provided by the National Institute of Statistics of Chile. We showed that both proposed models had a good performance both in terms of model fitting. Thus, we conclude that results were favorable to the use of Singh-Maddala and Dagum quantile regression models for positive asymmetric data, such as income data.

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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Sánchez, L., Leiva, V., Galea, M., and Saulo, H (2021) Birnbaum-saunders quantile regression and its diagnostics with application to economic data self0.92843100%
2Klugman, S. A., Panjer, H. H., and Willmot, G. E (2019) Loss models : from data to decisions, volume Fifth edition0.64441100%
3Kumar, D (2017) The Singh–Maddala distribution: properties and estimation0.58531100%
4Dagum, C (2008) Modeling income distributions and Lorenz curves, volume 5, chapter A New Model of Personal Income Distribution: Specificationand…0.51121100%
5Kleiber, C (2008) A guide to the Dagum distributions0.51121100%
6Cox, D. R. and Hinkley, D. V (1979) Theoretical Statistics0.40511100%
7R Core Team (2019) R: A language and environment for statistical computing0.40511100%
8Cramer, J. S (1971) Empirical econometrics0.40511100%
9Dagum, C (1973) Un modèle nonlinéaire de répartition fonctionnelle du revenu0.40511100%
10Dagum, C (1975) A model of income distribution and the conditions of existence of moments of finite order0.40511100%

Showing the top 10 of 25 scored citations.