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Disaggregation of the Gini Coefficient and Its Application to Australia 1986

Author

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  • Graham, Mary

    (Deakin University)

Abstract

Podder (1992) derived a formula for the elasticity of the Gini coefficient with respect to income components and used this to demonstrate the proper use of the disaggregation of the Gini coefficient by factor component. This paper applies Podder’s method of decomposition of the Gini coefficient to subgroups of population, based on various demographic characteristics, using the ABS’s 1986 Income Distribution Survey. The decomposition is used to analyse the contribution of incomes of different population subgroups to the overall inequality level in Australia. Podder’s method allows the exact effect of a proportionate change in income within a subgroup to be quantified and thus the change in the overall Gini coefficient can be calculated. The purpose of this paper is to show how and to what extent inequalities among different income units with different socio-economic characteristics might be changed. This has useful policy applications as the exact impact of any change to the income of a sub-group can be determined. Important questions regarding the contributions of the different subgroups to the overall level of inequality are also addressed.

Suggested Citation

  • Graham, Mary, 1995. "Disaggregation of the Gini Coefficient and Its Application to Australia 1986," Economic Analysis and Policy, Elsevier, vol. 25(2), pages 140-151, September.
    • Handle: RePEc:eee:ecanpo:v:25:y:1995:i:2:p:140-151
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    Cited by:

    1. Paulo Mourao & Alexandre Junqueira, 2021. "Through the Irregular Paths of Inequality: An Analysis of the Evolution of Socioeconomic Inequality in Brazilian States Since 1976," Sustainability, MDPI, vol. 13(4), pages 1-17, February.

    More about this item

    Keywords

    Gini Coefficient; Gini;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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