Bivariate income distributions with lognormal conditionals

In this paper, the most general bivariate distribution with lognormal conditionals is fully characterized, using the methodology proposed by [3]. The properties of the new family are studied in detail, including marginal and conditional distributions, regression functions, dependence measures, moments and inequality measures. The new distribution is very broad, and contains as a particular case the classical bivariate lognormal distribution. Several subfamilies are studied and a generalization of the basic model is discussed. Finally, we present an empirical application. We estimate and compare the basic model proposed in the paper with a classical model, using data from the European Community Household Panel in different periods of time.