Estimating Lorenz Curve of Income by Cubic Spline with Multiple Knots

Abstract

In this paper we propose a method for convex approximation of the Lorenz curve by cubic-spline with multiple knots. This method is applied to the China-2005 grouped data of urban and rural residents’ income, published in “China Statistical Yearbook-2006â€. Then, we use the method proposed in this paper to estimate the Lorenz curves and the Gini index of urban and rural residents’ income in China, respectively. Finally we estimate the Lorenz curve of residents’ income of whole China (2005) by the aggregated approach.