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Constructing Long and Dense Time-Series of Inequality Using the Theil Index


  • Pedro Conceicao

    (University of Texas)

  • James K. Galbraith

    (University of Texas)


This paper proposes the application of the between-group component of the Theil index to data on wages, earnings, and employment by industrial classification, in order to measure the evolution of wage or earnings inequality through time. We provide formal criteria under which such a between-group Theil statistic can reasonably be assumed to give results that also track the (unobserved) evolution of inequality within industries. The advantage of this approach lies in the widespread availability of data from which long and dense time-series of inequality may be constructed. We conclude with an empirical application to the case of Brazil, an important developing country for which satisfactory Gini coefficients are scarce, but for which a between-industries Theil statistic may be computed on a monthly basis as far back as 1976.

Suggested Citation

  • Pedro Conceicao & James K. Galbraith, 2000. "Constructing Long and Dense Time-Series of Inequality Using the Theil Index," Eastern Economic Journal, Eastern Economic Association, vol. 26(1), pages 61-74, Winter.
  • Handle: RePEc:eej:eeconj:v:26:y:2000:i:1:p:61-74

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    References listed on IDEAS

    1. Steve J. Davis & John Haltiwanger, 1991. "Wage Dispersion Between and Within U.S. Manufacturing Plants, 1963-1986," NBER Working Papers 3722, National Bureau of Economic Research, Inc.
    2. Bound, John & Johnson, George, 1992. "Changes in the Structure of Wages in the 1980's: An Evaluation of Alternative Explanations," American Economic Review, American Economic Association, vol. 82(3), pages 371-392, June.
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    Cited by:

    1. Kemp-Benedict, Eric, 2015. "New ways to slice the pie: Span of control and wage and salary distribution within firms," MPRA Paper 77072, University Library of Munich, Germany, revised 24 Feb 2017.
    2. repec:spr:soinre:v:134:y:2017:i:2:d:10.1007_s11205-016-1435-x is not listed on IDEAS
    3. Kam Ki Tang & Dennis Petrie, 2009. "Non-Hierarchical Bivariate Decomposition of Theil Indexes," Economics Bulletin, AccessEcon, vol. 29(2), pages 918-927.
    4. Wenli Cheng & Yongzheng Wu, 2015. "Income inequality in China: Testing the Kuznets Hypothesis with National Time Series and Provincial Panel Data 1978-2011," Monash Economics Working Papers 32-15, Monash University, Department of Economics.
    5. Gomis-Porqueras, Pere & Garcilazo, Enrique, 2003. "EU Structural and Cohesion Funds in Spain and Portugal: Is Regional and National Inequality Increasing?," MPRA Paper 50343, University Library of Munich, Germany.
    6. Lee, Woojin, 2003. "Is democracy more expropriative than dictatorship? Tocquevillian wisdom revisited," Journal of Development Economics, Elsevier, vol. 71(1), pages 155-198, June.
    7. Vogel, Sebastian & Meyr, Herbert, 2015. "Decentral allocation planning in multi-stage customer hierarchies," European Journal of Operational Research, Elsevier, vol. 246(2), pages 462-470.
    8. Nathalie Scholl, 2015. "The Impact of Trade on Wage Inequality in Developing Countries: Technology vs. Comparative Advantage," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 190, Courant Research Centre PEG.
    9. Mamoon, Dawood, 2017. "Why International Trade Cause Inequality in Developing Countries," MPRA Paper 82268, University Library of Munich, Germany.
    10. Kemp-Benedict, Eric, 2015. "A middle-manager model of wage and salary distribution within firms," MPRA Paper 64303, University Library of Munich, Germany.
    11. Riccardo Leoncini, 2017. "Innovation, inequality and the skill premium," SPRU Working Paper Series 2017-16, SPRU - Science and Technology Policy Research, University of Sussex.
    12. Cooke, Stephen C. & Kulandaisamy, Bharathkumar A., 2010. "Wage Divergence between the Rocky Mountain States and the U.S.: Idaho Measures and Sources, 2001-2009," The Review of Regional Studies, Southern Regional Science Association, vol. 40(1), pages 99-124.

    More about this item


    Inequality; Wage;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration


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