Fitting the Lorenz curve

Abstract

The Lorenz curve is a graph relating the cumulative proportion of income receiving units to the cumulative proportions of incomes in the ascending order. Usually the Lorenz curve is derived from the income density function. In this note the curve is studied in the context of fitting equations to data. After discussing the general formalism of a Lorenz curve, a generalization of the Lorenz curve associated with the Pareto model is introduced. The new functional form provided a basis to compute several indices of concentration and asymmetry. In addition, fitting and estimation procedure for the parameters of the curve were proposed. Finally, the suggested model was applied to investigate the relationship between economic growth and income distribution.