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On the decomposition of Gini coefficients by population class and income source: a spreadsheet approach and application

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  • Shujie Yao

Abstract

There are in the literature many different formulae and methodologies for deriving and decomposing Gini coefficients. Needless to say, different methodologies have their own advantages and limitations. Some Gini formulae are unnecessarily complicated and impractical. Some are biased estimators and/or not decomposable. This paper presents a simple and exact formula and develops a systematic procedure for decomposition by population class and income source in a spreadsheet without using matrix algebra, integration, regression and covariances. The Gini formula and decomposition method can be used for individual data and for evenly or unevenly grouped data. Many complicated concepts regarding the Gini and its components are given an intuitive economic interpretation. A household survey data set for Sichuan, China, is used to demonstrate, step by step, how the methodology is applied in empirical analyses.

Suggested Citation

  • Shujie Yao, 1999. "On the decomposition of Gini coefficients by population class and income source: a spreadsheet approach and application," Applied Economics, Taylor & Francis Journals, vol. 31(10), pages 1249-1264.
    • Handle: RePEc:taf:applec:v:31:y:1999:i:10:p:1249-1264
    DOI: 10.1080/000368499323463
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    Cited by:

    1. Francesca Gastaldi & Paolo Liberati & Elena Pisano & Simone Tedeschi, 2014. "Progressivity-Improving VAT Reforms in Italy," Working papers 6, Società Italiana di Economia Pubblica.
    2. Edward N. Wolff & Ajit Zacharias, 2013. "Class structure and economic inequality," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 37(6), pages 1381-1406.
    3. Zhang, Yingqiang & Eriksson, Tor, 2010. "Inequality of opportunity and income inequality in nine Chinese provinces, 1989-2006," China Economic Review, Elsevier, vol. 21(4), pages 607-616, December.
    4. Jahangir A. M. Khan & Sayem Ahmed & Tao Chen & Ewan M. Tomeny & Louis W. Niessen, 2019. "A Transparent Universal Health Coverage Index with Decomposition by Socioeconomic Groups: Application in Asian and African Settings," Applied Health Economics and Health Policy, Springer, vol. 17(3), pages 399-410, June.
    5. Edward N. Wolff & Ajit Zacharias, 2007. "The Levy Institute Measure of Economic Well-Being United States, 1989-2001," Eastern Economic Journal, Eastern Economic Association, vol. 33(4), pages 443-470, Fall.
    6. Wodon, Quentin & Yitzhaki, Shlomo, 2003. "The effect of using grouped data on the estimation of the Gini income elasticity," Economics Letters, Elsevier, vol. 78(2), pages 153-159, February.
    7. Cheong, Tsun Se & Wu, Yanrui, 2014. "The impacts of structural transformation and industrial upgrading on regional inequality in China," China Economic Review, Elsevier, vol. 31(C), pages 339-350.
    8. Francesca Gastaldi & Paolo Liberati & Elena Pisano & Simone Tedeschi, 2017. "Regressivity-Reducing VAT Reforms," International Journal of Microsimulation, International Microsimulation Association, vol. 10(1), pages 39-72.
    9. Feng, Kuishuang & Hubacek, Klaus & Guan, Dabo, 2009. "Lifestyles, technology and CO2 emissions in China: A regional comparative analysis," Ecological Economics, Elsevier, vol. 69(1), pages 145-154, November.
    10. Cysne, Rubens Penha, 2004. "Towards a measure of income inequality freed from the volatility caused by variations in the rate of unemployment," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 560, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    11. Achille VERNIZZI & Maria Giovanna MONTI & Mauro MUSSINI, 2010. "A Gini and concentration index decomposition with an application to the APK reranking measure," Departmental Working Papers 2010-10, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano, revised 13 Dec 2010.
    12. repec:ijm:journl:v109:y:2017:i:1:p:39-72 is not listed on IDEAS
    13. St鰨ane Mussard & Patrick Richard, 2012. "Linking Yitzhaki's and Dagum's Gini decompositions," Applied Economics, Taylor & Francis Journals, vol. 44(23), pages 2997-3010, August.
    14. Melissa Holly Mahoney, 2013. "Inequity in American Schools: A New Perspective on the Distributional Effects of School Expenditures on Economic Well-Being," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(4), pages 728-755, December.
    15. Ross Guest & Robyn Swift, 2008. "Fertility, income inequality, and labour productivity," Oxford Economic Papers, Oxford University Press, vol. 60(4), pages 597-618, October.
    16. Yao, Shujie & Zhang, Zongyi & Hanmer, Lucia, 2004. "Growing inequality and poverty in China," China Economic Review, Elsevier, vol. 15(2), pages 145-163.
    17. Babulo, Bedru & Muys, Bart & Nega, Fredu & Tollens, Eric & Nyssen, Jan & Deckers, Jozef & Mathijs, Erik, 2009. "The economic contribution of forest resource use to rural livelihoods in Tigray, Northern Ethiopia," Forest Policy and Economics, Elsevier, vol. 11(2), pages 123-131, March.
    18. Ogwang Tomson, 2014. "A Convenient Method of Decomposing the Gini Index by Population Subgroups," Journal of Official Statistics, Sciendo, vol. 30(1), pages 91-105, March.
    19. Iqbal Anwar & Herfina Y Nababan & Shabnam Mostari & Aminur Rahman & Jahangir A M Khan, 2015. "Trends and Inequities in Use of Maternal Health Care Services in Bangladesh, 1991-2011," PLOS ONE, Public Library of Science, vol. 10(3), pages 1-14, March.
    20. JØrgen Lauridsen & Terkel Christiansen & Jens Gundgaard & Unto Häkkinen & Harri Sintonen, 2007. "Decomposition of health inequality by determinants and dimensions," Health Economics, John Wiley & Sons, Ltd., vol. 16(1), pages 97-102, January.
    21. Yuheng Li, 2011. "Urban-rural interaction and implications for regional planning in China, 1980-2010," ERSA conference papers ersa11p1346, European Regional Science Association.
    22. Ajit S. Bhalla & Shujie Yao & Zongyi Zhang, 2003. "Causes of inequalities in China, 1952 to 1999," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(8), pages 939-955.
    23. Gerardo Angeles-Castro, 2007. "Factors Driving Changes in Income Distribution in Post-Reform Mexico," Studies in Economics 0706, School of Economics, University of Kent.
    24. Mototsugu Fukushige & Noriko Ishikawa & Satoko Maekawa, 2012. "A modified Kakwani measure for health inequality," Health Economics Review, Springer, vol. 2(1), pages 1-7, December.
    25. Bickenbach, Frank & Bode, Eckhardt, 2006. "Disproportionality measures of concentration, specialization, and polarization," Kiel Working Papers 1276, Kiel Institute for the World Economy (IfW Kiel).

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