Adjusting for age effects in cross-sectional distributions

Abstract

Income and wealth differ over the life cycle. In cross-sectional distri- butions of income or wealth, classical inequality measures such as the Gini, could therefore find substantial inequality even if everyone have the same life-time in- come or wealth. We describe the AG index (Almås and Mogstad, 2011) which is a generalization of the classical Gini index with attractive properties, and we provide the adgini command which provides the AG index as well as the classical Gini index. The adgini command provides options to produce other well known age-adjusted inequality measures, such as the Paglin-Gini (Paglin, 1975) and the Wertz-Gini (Wertz, 1977), and provides efficient estimation of the classical Gini coefficient.