Pareto models for top incomes and wealth

Top incomes are often related to Pareto distribution. To date, economists have mostly used Type I distribution model the upper tail of income and wealth It is a parametric distribution, with interesting properties, that can be easily linked economic theory. In this paper, we first show modeling top lead biased estimation inequality, even millions observations. Then, Generalized and, more, Extended much less sensitive choice threshold. Thus, they provide more reliable results. We discuss different types bias could encountered in empirical studies some guidance for practice. illustrate, two applications investigated, on South Africa 2012 United States 2013.