In one of our previous
posts
we addressed the issue of the household Gini ratio dependence on the average
household size. We demonstrated that the Gini has not been increasing, as many economists
say, but was actually constant as the Gini for personal incomes [1, 2].
We would not repeat
the technical part of the post. Briefly, we showed that the household Gini is
biased up in 2007 relative to 1994 because the portion of smaller and thus
lower income households increased. Accordingly, the average size decreased. To do this, we normalized the household
income distribution to the total number of households and corrected the income
bins to the total increase in nominal GDP and the change in the total number of
households. This operation is similar to
that used for the Lorenz curve calculation.
In this post, we
present the evolution of income distribution in various household sizes and the
same procedure as for the whole distribution. Unfortunately, there are no
estimates of Gini ratio in all household sizes for 1994, but Figure 1 depicts
these estimates for 2007.
Figure 1. Gini ratio
as a function of the household size in 2007.
Figure 2 compares the household
income distributions (density functions) in 1994 and 2007. There were relatively
more small-size households with one and two people in expense of mid-income
households of 3 and more people. Not
having the 1994 Gini estimates, we may say that the Gini for the small-size households
increased and accordingly decreased for the larger households. But the effect of
changing dispersion (and thus Gini) in any household size is likely smaller than
the effect of larger households split with the creation of an excess of smaller
households.
Figure 2. The
evolution of density functions in various household sizes.
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