Title: Modelling income distribution using the log Student t distribution: New evidence for EU countries
Authors: Mercedes Prieto-Alaiz - University of Valladolid (Spain) [presenting]
Carmelo Garcia Perez - University of Alcala (Spain)
Francisco Javier Callealta Barroso - University of Alcala (Spain)
Abstract: The ability of the three-parameter log Student t distribution to model the size distribution of income is studied. Its theoretical properties and the economic interpretation of its parameters are analysed and some theoretical results on the distribution characteristics are obtained. The model is fit to income data for EU25 and several years and its goodness of fit measures are compared with those of the other three parameter distributions that have been considered as successful in modelling income distributions. It is concluded that the log Student t distribution is the best fitting in the vast majority of the countries and years considered. One of the reasons for these good fits is the possibility of reproducing the effect of a mode in the low-income environment.