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Comment: On the Interpretation (and Misinterpretation) of Inequality Decompositions by Income Sources

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  • Kimhi, Ayal

Abstract

This paper discusses interpretations of different inequality decomposition rules when inequality is decomposed by income sources. It argues that authors of a recent article based their conclusions on misinterpreted decomposition results. It also argues that marginal effects, derived as elasticities of inequality with respect to uniform increases in income from each source, are easily interpreted and can be compared across different decomposition rules.

Suggested Citation

  • Kimhi, Ayal, 2011. "Comment: On the Interpretation (and Misinterpretation) of Inequality Decompositions by Income Sources," World Development, Elsevier, vol. 39(10), pages 1888-1890.
    • Handle: RePEc:eee:wdevel:v:39:y:2011:i:10:p:1888-1890
    DOI: 10.1016/j.worlddev.2011.08.001
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    References listed on IDEAS

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    1. Paul, Satya, 2004. "Income sources effects on inequality," Journal of Development Economics, Elsevier, vol. 73(1), pages 435-451, February.
    2. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
    3. Anthony F. Shorrocks, 1983. "The Impact of Income Components on the Distribution of Family Incomes," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(2), pages 311-326.
    4. Podder, Nripesh & Chatterjee, Srikanta, 2002. "Sharing the national cake in post reform New Zealand: income inequality trends in terms of income sources," Journal of Public Economics, Elsevier, vol. 86(1), pages 1-27, October.
    5. John C. H. Fei & Gustav Ranis & Shirley W. Y. Kuo, 1978. "Growth and the Family Distribution of Income by Factor Components," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 92(1), pages 17-53.
    6. Davis, Benjamin & Winters, Paul & Carletto, Gero & Covarrubias, Katia & Quiñones, Esteban J. & Zezza, Alberto & Stamoulis, Kostas & Azzarri, Carlo & DiGiuseppe, Stefania, 2010. "A Cross-Country Comparison of Rural Income Generating Activities," World Development, Elsevier, vol. 38(1), pages 48-63, January.
    7. Kimhi, Ayal, 2007. "Regression-Based Inequality Decomposition: A Critical Review and Application to Farm-Household Income Data," Discussion Papers 290001, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    8. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-156, February.
    9. Jonathan Morduch & Terry Sicular, 2002. "Rethinking Inequality Decomposition, With Evidence from Rural China," Economic Journal, Royal Economic Society, vol. 112(476), pages 93-106, January.
    10. Nripesh Podder, 1993. "The Disaggregation Of The Gin1 Coefficient By Factor Components And Its Applications To Australia," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(1), pages 51-61, March.
    11. Graham Pyatt & Chau-nan Chen & John Fei, 1980. "The Distribution of Income by Factor Components," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(3), pages 451-473.
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    1. Tushar Agrawal & Ankush Agrawal, 2023. "Beyond Consumption Expenditure: Income Inequality and Its Sources in India," Progress in Development Studies, , vol. 23(1), pages 7-27, January.
    2. Philipp Ehrl, 2014. "A breakdown of residual wage inequality in Germany," Working Papers 150, Bavarian Graduate Program in Economics (BGPE).
    3. Kimhi, Ayal & Arayama, Yuko & Kim, Jong-Moo, 2014. "Identifying determinants of income inequality in the presence of multiple income sources: The case of Korean farm households," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182842, European Association of Agricultural Economists.
    4. Salverda, Wiemer & Checchi, Daniele, 2014. "Labour-Market Institutions and the Dispersion of Wage Earnings," IZA Discussion Papers 8220, Institute of Labor Economics (IZA).
    5. Yun Xu & Xiaoping Qiu & Xueting Yang & Guojie Chen, 2018. "Factor Decomposition of the Changes in the Rural Regional Income Inequality in Southwestern Mountainous Area of China," Sustainability, MDPI, vol. 10(9), pages 1-15, September.
    6. Simon Jurkatis, "undated". "Dos and Don'ts of Gini Decompositions," BDPEMS Working Papers 2013003, Berlin School of Economics.
    7. Jurkatis, Simon & Strehl, Wolfgang, 2014. "Gini decompositions and Gini elasticities: On measuring the importance of income sources and population subgroups for income inequality," Discussion Papers 2014/22, Free University Berlin, School of Business & Economics.
    8. Muszyńska Joanna & Wędrowska Ewa, 2018. "Income Inequality of Households in Poland: A Subgroup Decomposition of Generalized Entropy Measures," Econometrics. Advances in Applied Data Analysis, Sciendo, vol. 22(4), pages 43-64, December.

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