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Inequality measurement with subgroup decomposability and level-sensitivity

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  • Subramanian, Subbu

Abstract

Subgroup Decomposability is a very useful property in an inequality measure, and level-sensitivity, which requires a given level of inequality to acquire a greater significance the poorer a population is, is a distributionally appealing axiom for an inequality index to satisfy. In this paper, which is largely in the nature of a recollection of important results on the characterization of subgroup decomposable inequality measures, the mutual compatibility of subgroup decomposability and level-sensitivity is examined, with specific reference to a classification of inequality measures into relative, absolute, centrist, and unit-consistent types. Arguably, the most appealing combination of properties for a symmetric, continuous, normalized, transfer-preferring and replication-invariant (S-C-N-T-R) inequality measure to satisfy is that of subgroup decomposability, centrism, unit-consistency and level-sensitivity. The existence of such an inequality index is (as far as this author is aware) yet to be established. However, it can be shown, as is done in this paper, that there does exist an S-C-N-T-R measure satisfying the (plausibly) next-best combination of properties - those of decomposability, centrism, unit-consistency and level-neutrality.

Suggested Citation

  • Subramanian, Subbu, 2011. "Inequality measurement with subgroup decomposability and level-sensitivity," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 5, pages 1-18.
    • Handle: RePEc:zbw:ifweej:20119
    DOI: 10.5018/economics-ejournal.ja.2011-9
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    References listed on IDEAS

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    1. Shorrocks, Anthony F, 1984. "Inequality Decomposition by Population Subgroups," Econometrica, Econometric Society, vol. 52(6), pages 1369-1385, November.
    2. Sen, Amartya, 1997. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198292975.
    3. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-625, April.
    4. Étienne Gilbert, 1983. "Sudhir Anand, Inequality and Poverty in Malaysia, measurement and decomposition," Revue Tiers Monde, Programme National Persée, vol. 24(95), pages 709-710.
    5. Satya Chakravarty & Swami Tyagarupananda, 2009. "The subgroup decomposable intermediate indices of inequality," Spanish Economic Review, Springer;Spanish Economic Association, vol. 11(2), pages 83-97, June.
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    Cited by:

    1. Chandan Sharma & Sudharshan Reddy Paramati, 2018. "Measuring Inequality of Opportunity for the Backward Communities: Regional Evidence from the Indian Labour Market," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 138(2), pages 479-503, July.
    2. Manfred Krtscha, 2017. "Some axiomatics of inequality measurement, with specific reference to intermediate indices," Working Papers 445, ECINEQ, Society for the Study of Economic Inequality.

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    More about this item

    Keywords

    subgroup decomposability; level-sensitivity; absolute inequality measure; relative inequality measure; centrist inequality measure; unit-consistency;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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