Inequality decomposition values: the trade-off between marginality and efficiency
This paper presents a general procedure for decomposing income inequality measures by income sources. The methods of decomposition proposed are based on the Shapley value and extensions of the Shapley value of transferable utility cooperative games. In particular, we find that Owen’s value can find an interesting application in this context.We show that the axiomatization by the potential of Hart and Mas-Colell remains valid in the presence of the domain restriction of inequality indices. We also examine the properties of these decomposition rules and perform a comparison with Shorrocks’ decomposition rule properties. Copyright Springer Science+Business Media, LLC. 2013
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Volume (Year): 11 (2013)
Issue (Month): 1 (March)
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- Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
- Kolm, Serge-Christophe, 1976. "Unequal inequalities. II," Journal of Economic Theory, Elsevier, vol. 13(1), pages 82-111, August.
- Sergiu Hart, 2006. "Shapley Value," Discussion Paper Series dp421, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
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