Testing for stochastic dominance up to a common relative poverty line

Although a wide array of stochastic dominance tests exist for poverty measurement and identification, they assume the income distributions have independent poverty lines or a common absolute (fixed) poverty line. We propose a stochastic dominance test for comparing income distributions up to a commo...

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Bibliographic Details
Published in:Econometrics 2020-03, Vol.8 (1), p.1-5
Main Author: Mehdi, Tahsin
Format: Article
Language:English
Subjects:
bootstrap inference
Canada
common poverty line
Income distribution
pooled quantile
Poverty
relative poverty line
stochastic dominance
Stochastic systems
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Summary:Although a wide array of stochastic dominance tests exist for poverty measurement and identification, they assume the income distributions have independent poverty lines or a common absolute (fixed) poverty line. We propose a stochastic dominance test for comparing income distributions up to a common relative poverty line (i.e., some fraction of the pooled median). A Monte Carlo study demonstrates its superior performance over existing methods in terms of power. The test is then applied to some Canadian household survey data for illustration.
ISSN:2225-1146
2225-1146
DOI:10.3390/econometrics8010005