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

Abstract 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 indica-tors, 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 func-tionality of laeken beyond the standard estimation techniques, a brief mathematical description of the implemented procedures is given as well.