Affiliations: Bureau of International Labor Affairs, U.S. Department
of Labor, Room S-5317, 200 Constitution Avenue, NW, Washington, DC 20210, USA.
Tel.: +1 202 693 4846; Fax: +1 202 693 4830; E-mail: [email protected]
Abstract: In his paper, Dr. Joseph Gastwirth argues that an income inequality
indicator that combines the Gini coefficient with a measure that captures right
skewness is a better measure to detect changes in the distribution that
disproportionately favor upper income levels. Gastwirth proposes the indicator,
G2, in which the mean/median is multiplied by the Gini coefficient, as a better
measure of income inequality in such circumstances. In this paper, I consider
whether G2 is a useful measure in Brazil and Mexico, two upper middle income
countries that have historically high income inequality that appears to have
decreased in the recent past. This paper suggests that G2 may be somewhat
better than the Gini coefficient at capturing changes both in increasing income
inequality and decreasing income inequality. In order to provide context for
interpreting these results, I examine the quality of data on income inequality
in both countries by analyzing the income-related questionnaires of the main
household income and expenditure surveys for both countries. I find that
although Mexico's household income survey does have more detailed questions on
non-wage income than Brazil's household income survey, income estimates still
fall below consumption estimates in both countries, which suggests consumption
may be a better source of information on income inequality in both Brazil and
Mexico.
Keywords: Brazil, consumption, Gini coefficient, income inequality, Mexico, non-wage income, self-employment income
