Effect of the rise of a person's income on inequality

Abstract

If income distribution is unequal, the effect of a marginal increase in an income x on inequality is an increasing function of x. The present paper analyses this function for several inequality measures. The income for which the effect changes sign is the relative poverty line. The value of this limit between the relatively poor and the relatively rich is computed for Brazil and five regions, in 1999, considering two types of income distribution: the income of economically active persons and per capita family income. The paper also analyses the effect that a marginal increase in all incomes equal to or greater than x produces on inequality.