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Measuring Bipolarization, Inequality, Welfare and Poverty

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  • Juan Gabriel Rodríguez

    ()
    (Universidad Rey Juan Carlos)

Abstract

This paper analyzes the relationship between bipolarization and inequality, welfare and poverty measures. First, we clarify the similarities and differences between bipolarization and inequality measures. Second, it is shown that bipolarization is the difference between the welfare levels of the richer and poorer income groups when feelings of identification between individuals are based on their utility functions. In fact, bipolarization is interpreted as the welfare of the richer group that is wasted to compensate for income bipolarization. Third, a relationship between bipolarization measurement and the normalized poverty deficit index is established. These findings are applied to the polarization measures of Wolfson (1994), Esteban and Ray (1994) and Lasso de la Vega and Urrutia (2006).

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File URL: http://www.ecineq.org/milano/WP/ECINEQ2006-39.pdf
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Bibliographic Info

Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 39.

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Length: 31 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:inq:inqwps:ecineq2006-39

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Keywords: bipolarization; inequality; welfare; poverty.;

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  1. D'Ambrosio, Conchita, 2001. "Household Characteristics and the Distribution of Income in Italy: An Application of Social Distance Measures," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(1), pages 43-64, March.
  2. Juan Prieto-Rodríguez & Juan Gabriel Rodríguez & Rafael Salas, . "Interactions Inequality-Polarization: Characterization Results(*)," Working Papers, Instituto de Estudios Fiscales 15-05 Classification-JEL , Instituto de Estudios Fiscales.
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  7. Cowell, Frank A, 1980. "On the Structure of Additive Inequality Measures," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 47(3), pages 521-31, April.
  8. Juan G. Rodríguez & Rafael Salas, . "Extended Bi-Polarization And Inequality Measures," Working Papers, Instituto de Estudios Fiscales 10-03 Classification-JEL , Instituto de Estudios Fiscales.
  9. Sheshinski, Eytan, 1972. "Relation between a social welfare function and the gini index of income inequality," Journal of Economic Theory, Elsevier, Elsevier, vol. 4(1), pages 98-100, February.
  10. Jean-Yves Duclos & Joan Esteban & Debraj Ray, 2003. "Polarization: Concepts, Measurement, Estimation," Working Papers 46, Barcelona Graduate School of Economics.
  11. Esteban, J. & Ray, D., 1993. "On the Measurement of Polarization," UFAE and IAE Working Papers, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) 221.93, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  12. Gradin, Carlos, 2000. "Polarization by Sub-populations in Spain, 1973-91," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(4), pages 457-74, December.
  13. Jean-Yves Duclos & Damien Echevin, 2003. "Bi-Polarization Comparisons," Cahiers de recherche, CIRPEE 0341, CIRPEE.
  14. Conchita D'Ambrosio & Edward N. Wolff, . "Is Wealth Becoming More Polarized in the United States?," Economics Working Paper Archive wp_330, Levy Economics Institute.
  15. Newbery, David, 1970. "A theorem on the measurement of inequality," Journal of Economic Theory, Elsevier, Elsevier, vol. 2(3), pages 264-266, September.
  16. Lambert, Peter J & Aronson, J Richard, 1993. "Inequality Decomposition Analysis and the Gini Coefficient Revisited," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 103(420), pages 1221-27, September.
  17. Hey, John D & Lambert, Peter J, 1980. "Relative Deprivation and the Gini Coefficient: Comment," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 95(3), pages 567-73, November.
  18. Wolfson, Michael C, 1994. "When Inequalities Diverge," American Economic Review, American Economic Association, American Economic Association, vol. 84(2), pages 353-58, May.
  19. Ma Casilda Lasso de la Vega & Ana Marta Urrutia, 2006. "An Alternative Formulation of the Esteban-Gradín-Ray Extended Measure of Polarization," Journal of Income Distribution, Journal of Income Distribution, Journal of Income Distribution, vol. 15(I), pages 42-54, December.
  20. Wang, You-Qiang & Tsui, Kai-Yuen, 2000. " Polarization Orderings and New Classes of Polarization Indices," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(3), pages 349-63.
  21. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, Econometric Society, vol. 52(3), pages 761-66, May.
  22. Chakravarty, Satya R & Majumder, Amita, 2001. "Inequality, Polarisation and Welfare: Theory and Applications," Australian Economic Papers, Wiley Blackwell, Wiley Blackwell, vol. 40(1), pages 1-13, March.
  23. Wolfson, Michael C, 1997. "Divergent Inequalities: Theory and Empirical Results," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 43(4), pages 401-21, December.
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Cited by:
  1. C. Chameni Nembua, 2012. "On a class of bi-polarization variance-based measurement: evidence from Cameroonian data," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 19(13), pages 1311-1317, September.
  2. Abdelkrim Araar, 2008. "Social Classes, Inequality and Redistributive Policies in Canada," Cahiers de recherche, CIRPEE 0817, CIRPEE.

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