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The Gini Coefficient Reveals More

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Author Info
Peter J. Lambert () (University of Oregon Economics Department)
Andre Decoster (University of Leuven)

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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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Paper provided by University of Oregon Economics Department in its series University of Oregon Economics Department Working Papers with number 2004-18.

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Length: 21
Date of creation: 05 Dec 2004
Date of revision: 05 Dec 2004
Handle: RePEc:ore:uoecwp:2004-18

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Keywords: Gini decomposition inequality decomposition Gini residual

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Find related papers by JEL classification:
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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    Other versions:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ivica Urban & Peter J. Lambert, 2005. "Redistribution, horizontal inequity and reranking: how to measure them properly," University of Oregon Economics Department Working Papers 2005-12, University of Oregon Economics Department. [Downloadable!]
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