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The Gini coefficient reveals more

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  • Peter J. Lambert
  • Andre' Decoster

Abstract

We revisit the well-known decomposition of the Gini coefficient into between-groups, within-groups and overlap terms in the context of two groups in which the incomes in one group may be scaled and that groupÂ’s population weight modified. In this more general setting than usual, we focus on the properties of the overlap term, proving inter alia that overlap unambiguously reduces as a result of a within-group progressive transfer, and is increased by scaling up the incomes in the group with the lower mean, reaching a maximum when the two means become the same. In the case of a socially heterogeneous population and equivalized incomes, the effect on the Gini overlap of changing the income unit is determined, along with that of adjusting the equivalence scale deflator in case the income unit is the equivalent adult (such adjustment simultaneously changing the weighting of income units). Relationships of the findings to existing literature are thoroughly explored.

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File URL: ftp://metron.sta.uniroma1.it/RePEc/articoli/si5.pdf
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Bibliographic Info

Article provided by Dipartimento di Statistica, Probabilità e Statistiche Applicate - University of Rome in its journal Metron.

Volume (Year): LXIII (2005)
Issue (Month): 3 ()
Pages: 373-400

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Handle: RePEc:mtn:ancoec:si5

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Cited by:
  1. Almas, Ingvild & Havnes, Tarjei & Mogstad, Magne, 2011. "Baby Booming Inequality? Demographic Change and Earnings Inequality in Norway, 1967-2000," CEPR Discussion Papers 8393, C.E.P.R. Discussion Papers.
  2. Ivica Urban & Peter J. Lambert, 2008. "Redistribution, Horizontal Inequity, and Reranking , How To Measure Them ProperlyAbstract: The decomposition of the Gini-based index of redistributive effect of an income tax into vertical, horizontal," Public Finance Review, , vol. 36(5), pages 563-587, September.
  3. Almås, Ingvild & Mogstad, Magne, 2010. "Older or Wealthier? The Impact of Age Adjustment on Cross-Sectional Inequality Measures," Discussion Paper Series in Economics 9/2010, Department of Economics, Norwegian School of Economics.
  4. Monti, maria & Santoro, alessandro, 2010. "Stratification and between-group inequality: a new approach to measurement," MPRA Paper 29361, University Library of Munich, Germany.
  5. Paolo Liberati & Shlomo Yitzhaki, 2012. "GDP and beyond: an implementation of welfare considerations to the distribution of earnings in Italy," Departmental Working Papers of Economics - University 'Roma Tre' 0146, Department of Economics - University Roma Tre.
  6. Ebert, Udo, 2010. "The decomposition of inequality reconsidered: Weakly decomposable measures," Mathematical Social Sciences, Elsevier, vol. 60(2), pages 94-103, September.
  7. Mornet, Pauline & Zoli, Claudio & Mussard, Stéphane & Sadefo-Kamdem, Jules & Seyte, Françoise & Terraza, Michel, 2013. "The (α, β)-multi-level α-Gini decomposition with an illustration to income inequality in France in 2005," Economic Modelling, Elsevier, vol. 35(C), pages 944-963.
  8. Bönke, Timm & Schröder, Carsten, 2007. "Equivalence scales reconsidered an empirical investigation," Discussion Papers 2007/21, Free University Berlin, School of Business & Economics.
  9. Jiandong Chen & Dai Dai & Ming Pu & Wenxuan Hou & Qiaobin Feng, 2010. "The trend of the Gini coefficient of China," Brooks World Poverty Institute Working Paper Series 10910, BWPI, The University of Manchester.
  10. Shlomo Yitzhaki & Edna Schechtman, 2009. "The “melting pot”: A success story?," Journal of Economic Inequality, Springer, vol. 7(2), pages 137-151, June.
  11. Paul Allanson, 2013. "Income stratification and between-group inequality," Dundee Discussion Papers in Economics 275, Economic Studies, University of Dundee.

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