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On the Decomposition of the Esteban and Ray Index by Income Sources

Author

Listed:
  • Elena Bárcena-Martín

    (Facultad de Ciencias Económicas y Empresariales, Universidad de Málaga, Calle Ejido 6, Málaga 29071, Spain)

  • Jacques Silber

    (Department of Economics, Bar-Ilan University, 52900 Ramat-Gan, Israel
    LISER, Esch-sur-Alzette L-4366, Luxembourg
    Centro Camilo Dagum, Tuscan Interuniversity Centre, Advanced Statistics for Equitable and Sustainable Development, Università di Pisa, Dipartimento di Economia e Management, Pisa 56124, Italy)

Abstract

This paper proposes a simple algorithm based on a matrix formulation to compute the Esteban and Ray ( ER ) polarization index. It then shows how the algorithm introduced leads to quite a simple decomposition of polarization by income sources. Such a breakdown was not available hitherto. The decomposition we propose will thus allow one to determine the sign, as well as the magnitude, of the impact of the various income sources on the ER polarization index. A simple empirical illustration based on EU data is provided.

Suggested Citation

  • Elena Bárcena-Martín & Jacques Silber, 2018. "On the Decomposition of the Esteban and Ray Index by Income Sources," Econometrics, MDPI, vol. 6(2), pages 1-9, March.
    • Handle: RePEc:gam:jecnmx:v:6:y:2018:i:2:p:17-:d:138029
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    References listed on IDEAS

    as
    1. Esteban, Joan & Ray, Debraj, 1994. "On the Measurement of Polarization," Econometrica, Econometric Society, vol. 62(4), pages 819-851, July.
    2. Abdelkrim Araar, 2008. "On the Decomposition of Polarization Indices: Illustrations with Chinese and Nigerian Household Surveys," Cahiers de recherche 0806, CIRPEE.
    3. Jean-Yves Duclos & Joan Esteban & Debraj Ray, 2004. "Polarization: Concepts, Measurement, Estimation," Econometrica, Econometric Society, vol. 72(6), pages 1737-1772, November.
    4. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-156, February.
    5. Pyatt, Graham, 1976. "On the Interpretation and Disaggregation of Gini Coefficients," Economic Journal, Royal Economic Society, vol. 86(342), pages 243-255, June.
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    Cited by:

    1. Iryna Kyzyma & Alessio Fusco & Philippe Van Kerm, 2022. "Distributional Change: Assessing the Contribution of Household Income Sources," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(1), pages 158-184, February.

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