Inferential Methods for the Dagum Regression Model
DOI:
https://doi.org/10.62933/btqa9879Keywords:
Dagum Distribution , Dagum Regression Model, Maximum Likelihood Estimation (MLE),, Method of Moments (MoM),Abstract
The Dagum Regression Model, introduced to address limitations in traditional econometric models, provides enhanced flexibility for analyzing data characterized by heavy tails and asymmetry, which is common in income and wealth distributions. This paper develops and applies the Dagum model, demonstrating its advantages over other distributions such as the Log-Normal and Gamma distributions. The model's parameters are estimated using Maximum Likelihood Estimation (MLE) and the Method of Moments (MoM). A simulation study evaluates both methods' performance across various sample sizes, showing that MoM tends to offer more robust and precise estimates, particularly in small samples. These findings provide valuable insights into the analysis of income inequality and wealth distribution using the Dagum model.
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