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Factor Components of Inequality: A Cross-Country Study

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  • Cecilia García-Peñalosa

    ()
    (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM))

  • Elsa Orgiazzi

    (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie)

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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Paper provided by HAL in its series Working Papers with number halshs-00802825.

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Date of creation: Mar 2013
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Handle: RePEc:hal:wpaper:halshs-00802825

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Keywords: income inequality; factor decomposition; decomposition by population subgroups;

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Citations

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Cited by:
  1. Elsa Orgiazzi & Paul Maarek, 2010. "Which factor bears the cost of currency crises?," 2010 Meeting Papers, Society for Economic Dynamics 810, Society for Economic Dynamics.
  2. Maarek, Paul, 2012. "Labor share, informal sector and development," MPRA Paper 38756, University Library of Munich, Germany.
  3. Cecilia García-Peñalosa & Elsa Orgiazzi, 2013. "Factor Components of Inequality: A Cross-Country Study," Working Papers, HAL halshs-00802825, HAL.
  4. 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.
  5. 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.
  6. Amparo Castelló-Climent & Rafael Doménech, 2012. "Human Capital and Income Inequality: Some Facts and Some Puzzles," Working Papers, International Economics Institute, University of Valencia 1201, International Economics Institute, University of Valencia.
  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. Cecilia Garcia-Peñalosa & Stephen Turnovsky, 2013. "Income Inequality, Mobility and the Accumulation of Capital," CESifo Working Paper Series 4559, CESifo Group Munich.

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