Robust Pareto Tail Modeling for the Estimation of Indicators on Social Exclusion using the R Package laeken

In this vignette, robust semiparametric estimation of social exclusion indicators using the R package laeken is discussed. Special emphasis is thereby given to income inequality indicators, as the standard estimates for these indicators are highly influenced by outliers in the upper tail of the income distribution. This influence can be reduced by modeling the upper tail with a Pareto distribution in a robust manner. While the focus of the paper is to demonstrate the functionality of laeken beyond the standard estimation techniques, a brief mathematical description of the implemented procedures is given as well.

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