To study the consequences of an economic change on income
distribution we rank distributions of income at different points in time
and quantify the degree of income inequalities. Changes in income
distribution can be ascertained either through drawing the Lorenz curves
or through estimating different inequality indices, such as Gini
Coefficient, coefficient of variation, standard deviation of logs of in•
comes, Theil's Index and Atkinson's Index. Ranking the distributions of
income through Lorenz curves is, of course, possible only as long as
they do not intersect. Moreover, when Lorenz curves do not intersect
each other, all inequality measures rank income distributions uniformly.
However, if the Lorenz curves do intersect each other. different
inequality measures may rank income distributions differently and thus
the direction of change cannot be determined unambiguously. For this
reason , the use of a single measure would be misleading. Accordingly ,
the use of a 'package' of inequality measures becomes essential.
Income Inequality in Pakistan: An Analysis of Existing Evidence
