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Decomposition of rank-dependent measures of inequality by subgroups

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  • Rolf Aaberge
  • Steinar Bjerve
  • Kjell Doksum

Abstract

The purpose of additive subgroup decomposition is to study the relationship between overall inequality and inequality within and between population subgroups defined by variables like gender, age, education and region of residence. As opposed to the inequality measures that are additively decomposable, the so-called generalized entropy family of inequality measures, the Gini coefficient does not admit decomposition into within- and between-group components but does also require an interaction (overlapping) term. The purpose of this paper is to introduce an alternative decomposition method that can be considered to be a parallel to Lerman and Yitzhaki's (1985) elasticity approach for decomposing the Gini coefficient by income sources, which means that the elasticity of the Gini coefficient with respect to various income components is treated as the basic quantities of the decomposition method. Thus, rather than decomposing the Gini coefficient or any other inequality measure into a within-inequality term, a between-inequality term and eventually an interaction term, the basic quantities of the introduced method are the effects of marginal changes in variables that are used to specify the population subgroups
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  • Rolf Aaberge & Steinar Bjerve & Kjell Doksum, 2005. "Decomposition of rank-dependent measures of inequality by subgroups," Metron - International Journal of Statistics, Dipartimento di Statistica, Probabilità e Statistiche Applicate - University of Rome, vol. 0(3), pages 493-503.
  • Handle: RePEc:mtn:ancoec:si11
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    References listed on IDEAS

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    Cited by:

    1. Victor Chernozhukov & Iván Fernández‐Val & Blaise Melly, 2013. "Inference on Counterfactual Distributions," Econometrica, Econometric Society, vol. 81(6), pages 2205-2268, November.
    2. Paul Makdissi & Stéphane Mussard, 2008. "Decomposition of s-concentration curves," Canadian Journal of Economics, Canadian Economics Association, vol. 41(4), pages 1312-1328, November.
    3. D'Angelo, Emanuela & Lilla, Marco, 2007. "Is there more than one linkage between Social Network and Inequality?," IRISS Working Paper Series 2007-12, IRISS at CEPS/INSTEAD.
    4. Elena Bárcena-Martin & Jacques Silber, 2013. "On the generalization and decomposition of the Bonferroni index," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 41(4), pages 763-787, October.
    5. H. Lehmann & M. G. Silvagni, 2013. "Is There Convergence of Russia’s Regions? Exploring the Empirical Evidence: 1995 – 2010," Working Papers wp901, Dipartimento Scienze Economiche, Universita' di Bologna.
    6. Stéphane Mussard, 2007. "Between-Group Pigou Dalton Transfers," Cahiers de recherche 07-06, Departement d'Economique de l'École de gestion à l'Université de Sherbrooke.
    7. Magne Mogstad, 2007. "Measuring Income Inequality under Restricted Interpersonal Comparability," Discussion Papers 498, Statistics Norway, Research Department.

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