Divergent Inequalities -- Theory, Empirical Results and Prescriptions

Abstract

Widely used summary measures of inequality or the "disappearing middle class" are potentially misleading. Divergences between evidence cited and conclusions drawn include failing to distinguish the concepts of inequality and polarization, and using scalar ?inequality? measures which are not consistent with rankings based on Lorenz curves. In addition, inappropriate claims about trends in inequality can arise from focusing on only a sub-population such as full-time male workers, and failing to account for sampling variability. These divergences are illustrated using Canadian data on labour incomes over the 1967 to 1994 period.