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On decomposing inequality and poverty changes over time: A multi-dimensional decomposition

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  • Mussini, Mauro

Abstract

The paper proposes a multi-dimensional decomposition of the changes in the Gini inequality index and the Sen–Shorrocks–Thon poverty index over time. The link among inequality change, re-ranking of individuals and income growth is explained by isolating the source and subgroup contributions to the determinants of the inequality change over time. We show that the poverty change over time depends on the re-ranking of individuals and the change in relative disparities among poverty gaps. These determinants of the change in poverty inequality are then decomposed by source and subgroup, yielding a three-way decomposition which combines time, source and subgroup ways of decomposing. An application to Italian household income data illustrates the proposed decomposition.

Suggested Citation

  • Mussini, Mauro, 2013. "On decomposing inequality and poverty changes over time: A multi-dimensional decomposition," Economic Modelling, Elsevier, vol. 33(C), pages 8-18.
  • Handle: RePEc:eee:ecmode:v:33:y:2013:i:c:p:8-18
    DOI: 10.1016/j.econmod.2013.03.010
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    References listed on IDEAS

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    1. Achille Vernizzi, 2009. "Playing with the Hadamard product in decomposing Gini, concentration, redistribution and re-ranking indexes," UNIMI - Research Papers in Economics, Business, and Statistics unimi-1085, Universitá degli Studi di Milano.
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    6. Mussard, Stéphane & Pi Alperin, Maria Noel, 2011. "Poverty growth in Scandinavian countries: A Sen multi-decomposition," Economic Modelling, Elsevier, vol. 28(6), pages 2842-2853.
    7. Stéphane Mussard & Patrick Richard, 2012. "Linking Yitzhaki's and Dagum's Gini decompositions," Applied Economics, Taylor & Francis Journals, vol. 44(23), pages 2997-3010, August.
    8. Mauro Mussini, 2013. "A matrix approach to the Gini index decomposition by subgroup and by income source," Applied Economics, Taylor & Francis Journals, vol. 45(17), pages 2457-2468, June.
    9. Donal O'Neill & Philippe Van Kerm, 2008. "An Integrated Framework For Analysing Income Convergence," Manchester School, University of Manchester, vol. 76(1), pages 1-20, January.
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    Cited by:

    1. Mauro Mussini, 2017. "Decomposing Changes in Inequality and Welfare Between EU Regions: The Roles of Population Change, Re-Ranking and Income Growth," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 130(2), pages 455-478, January.
    2. Mussini, Mauro & Grossi, Luigi, 2015. "Decomposing changes in CO2 emission inequality over time: The roles of re-ranking and changes in per capita CO2 emission disparities," Energy Economics, Elsevier, vol. 49(C), pages 274-281.

    More about this item

    Keywords

    Decomposition; Gini index; Sen–Shorrocks–Thon index; Population subgroup; Income source; Re-ranking; Income growth;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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