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Factor Components of Inequality: A Cross-Country Study

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  • Cecilia García-Peñalosa
  • Elsa Orgiazzi

Abstract

This paper uses data from the Luxembourg Income Study to examine some of the forces that have driven changes in household income inequality over the last three decades of the 20th century. We decompose inequality for 6 countries (Canada, Germany, Norway, Sweden, the UK, and the US) into the three sources of market income (earnings, property income and income from self-employment) and taxes and transfers. Our findings indicate that although changes in the distribution of earnings are an important aspect of recent increases in inequality, they are not the only one. Greater earnings dispersion has in some cases been accompanied by a reduction in the share of earnings that dampened its impact on overall household income inequality. In some countries the contribution of self-employment income to inequality has been on the rise, while in others, increases in inequality in capital income account for a substantial fraction of the observed distributional changes.

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Bibliographic Info

Article provided by International Association for Research in Income and Wealth in its journal Review of Income and Wealth.

Volume (Year): 59 (2013)
Issue (Month): 4 (December)
Pages: 689-727

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Handle: RePEc:bla:revinw:v:59:y:2013:i:4:p:689-727

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Citations

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Cited by:
  1. Cecilia García-Peñalosa & Elsa Orgiazzi, 2013. "Factor Components of Inequality: A Cross-Country Study," Working Papers halshs-00802825, HAL.
  2. Maarek, Paul, 2012. "Labor share, informal sector and development," MPRA Paper 38756, University Library of Munich, Germany.
  3. Eva Schlenker & Kai D. Schmid, 2014. "Capital income shares and income inequality in the European Union," Working Papers 329, ECINEQ, Society for the Study of Economic Inequality.
  4. Elsa Orgiazzi & Paul Maarek, 2010. "Which factor bears the cost of currency crises?," 2010 Meeting Papers 810, Society for Economic Dynamics.
  5. Miriam Rehm & Kai Daniel Schmid & Dieter Wang, 2014. "Why has inequality in Germany not risen further after 2005?," Working Papers 333, ECINEQ, Society for the Study of Economic Inequality.
  6. Cecilia Garcia-Peñalosa & Stephen Turnovsky, 2013. "Income Inequality, Mobility and the Accumulation of Capital," CESifo Working Paper Series 4559, CESifo Group Munich.
  7. Wang, Chen & Caminada, Koen, 2011. "Disentangling income inequality and the redistributive effect of social transfers and taxes in 36 LIS countries," MPRA Paper 32821, University Library of Munich, Germany.
  8. Amparo Castelló-Climent & Rafael Doménech, 2012. "Human Capital and Income Inequality: Some Facts and Some Puzzles," Working Papers 1201, International Economics Institute, University of Valencia.

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