Comparing Income Distributions - Methods and their Application to Wage Distributions in Poland

Rankings of income distributions are usually based on comparisons of social welfare. Assuming more or less general form of a social welfare function we can compare income distributions in time and in space. Income inequality can be compared by means of the well known Lorenz curve but the results will be ambiguous when the Lorenz functions of the considered populations intersect. Generalized Lorenz curves and quantile functions are more useful tools for ranking income distributions but in many situations it is necessary to make additional assumptions concerning social preferences reflected in a social welfare function. In the paper we present the methods useful for ranking income distributions and their application to the analysis of wage distributions in Poland. As a theoretical distribution the Dagum type-I model has been used.