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Factor decomposition of cross-country income inequality with interaction effects

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Author Info
Bruno Bracalente
Cristiano Perugini

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Abstract

In this paper we propose a decomposition of the Theil measures of per capita income inequality which accounts for interaction effects between its multiplicative factors. Our theoretical findings, supported by an empirical application referring to EU-25 countries, suggest that neglecting these effects may strongly bias the relative importance of some factors, with consequent misleading policy implications.

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Publisher Info
Paper provided by Università di Perugia, Dipartimento Economia, Finanza e Statistica in its series Quaderni del Dipartimento di Economia, Finanza e Statistica with number 54/2008.

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Length: 6 pages
Date of creation: 17 Apr 2008
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Handle: RePEc:pia:wpaper:54/2008

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Related research
Keywords: Inequality; Decomposition; Interaction Effects;

Find related papers by JEL classification:
C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - General
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General

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This page was last updated on 2009-12-1.

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