Download A new approach to measuring and studying the characteristics of

A new approach to measuring and studying the
characteristics of class membership: The progress of
poverty, inequality and polarization of income classes
in urban China.
Gordon Anderson∗, Alessio Farcomeni†,
Maria Grazia Pittau and Roberto Zelli‡
February 5, 2014
Abstract
Classifying agents into subgroups in order to measure the plight of the “poor”, “middle
class” or “rich” is common place in economics, unfortunately the definition of class
boundaries is contentious and beset with problems. Here a technique based on mixture
models is proposed for surmounting these problems by determining the number of
classes in a population and estimating the probability that an agent belongs to a
particular class. All of the familiar statistics for describing the classes remain available
and the possibility of studying the determinants of class membership is raised. As
a substantive illustration the methodology is exemplified in a unidimensional study
of households in Urban China in the last decade of the 20th Century. Four income
groups are classified and the progress of those “poor”, “lower middle”, “upper middle”
and “rich” classes are related to household and regional characteristics to study the
impact of urbanization and the one child policy on class membership over the period.
Keywords: Poverty Frontiers, Mixture Models, Class membership, Urban China.
JEL classification: C14; I32; O1.
∗
Department of Economics, University of Toronto, email: [email protected]
Department of Public Health and Infectious Diseases, Sapienza University of Rome,
email: [email protected]
‡
Department of Statistical Sciences, Sapienza University of Rome,
email: [email protected] , [email protected] .
†