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Inequality Decomposition - A Reconciliation

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  • Frank A Cowell
  • Carlo V. Fiorio

Abstract

We show how classic source-decomposition and subgroup-decomposition methodscan be reconciled with regression methodology used in the recent literature. We alsohighlight some pitfalls that arise from uncritical use of the regression approach. TheLIS database is used to compare the approaches using an analysis of the changingcontributions to inequality in the United States and Finland.

Suggested Citation

  • Frank A Cowell & Carlo V. Fiorio, 2009. "Inequality Decomposition - A Reconciliation," STICERD - Distributional Analysis Research Programme Papers 100, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  • Handle: RePEc:cep:stidar:100
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    References listed on IDEAS

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    Cited by:

    1. John Creedy & Nicolas Hérault†, 2011. "Decomposing Inequality and Social Welfare Changes : The Use of Alternative Welfare Metrics," Department of Economics - Working Papers Series 1121, The University of Melbourne.
    2. Jeff Larrimore, 2014. "Accounting for United States Household Income Inequality Trends: The Changing Importance of Household Structure and Male and Female Labor Earnings Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(4), pages 683-701, December.
    3. Carole Bonnet & Dominique Meurs & Benoît Rapoport, 2016. "Gender inequalities in pensions: Are determinants the same in the private and public sectors?," EconomiX Working Papers 2016-8, University of Paris Nanterre, EconomiX.
    4. Stefan Huemer & Beatrice Scheubel & Florian Walch, 2013. "Measuring Institutional Competitiveness in Europe," CESifo Economic Studies, CESifo, vol. 59(3), pages 576-608, September.
    5. Branko Milanovic & Verónica Amarante, 2016. "Income Inequality in Latin America: A Factor Component Analysis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62, pages 4-21, August.
    6. Mike Brewer & Liam Wren-Lewis, 2016. "Accounting for Changes in Income Inequality: Decomposition Analyses for the UK, 1978–2008," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(3), pages 289-322, June.
    7. Callan, Tim & Doorley, Karina & Savage, Michael, 2018. "Inequality in EU crisis countries. How effective were automatic stabilisers?," EUROMOD Working Papers EM10/18, EUROMOD at the Institute for Social and Economic Research.
    8. Brewer, Mike & Wren-Lewis, Liam, 2012. "Accounting for changes in income inequality: decomposition analyses for Great Britain, 1968-2009," ISER Working Paper Series 2012-17, Institute for Social and Economic Research.
    9. SOLOGON Denisa & VAN KERM Philippe & LI Jinjing & O'DONOGHUE Cathal, 2018. "Accounting for Differences in Income Inequality across Countries: Ireland and the United Kingdom," LISER Working Paper Series 2018-01, LISER.
    10. Halvarsson, Daniel & Korpi, Martin & Wennberg, Karl, 2016. "Entrepreneurship and Income Inequality," Ratio Working Papers 281, The Ratio Institute.
    11. repec:eso:journl:v:49:y:2018:i:2:p:173-200 is not listed on IDEAS
    12. Sauter, Caspar & Grether, Jean-Marie & Mathys, Nicole A., 2016. "Geographical spread of global emissions: Within-country inequalities are large and increasing," Energy Policy, Elsevier, vol. 89(C), pages 138-149.
    13. Kenjiro Yagura, 2015. "Effect of intergenerational asset transfers on land distribution in rural Cambodia: case studies of three rice-growing villages," Agricultural Economics, International Association of Agricultural Economists, vol. 46(2), pages 173-186, March.
    14. repec:eee:jeborg:v:145:y:2018:i:c:p:275-293 is not listed on IDEAS
    15. Chiang, Yen-Sheng, 2015. "Inequality measures perform differently in global and local assessments: An exploratory computational experiment," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 437(C), pages 1-11.
    16. Kimhi, Ayal, 2009. "Land Reform and Farm-Household Income Inequality: The Case of Georgia," Discussion Papers 54159, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    17. Frank A. Cowell & Emmanuel Flachaire, 2014. "Statistical Methods for Distributional Analysis," Working Papers halshs-01115996, HAL.
    18. Zelda Okatch & Abu Siddique & Anu Rammohan, 2013. "Determinants of Income Inequality in Botswana," Economics Discussion / Working Papers 13-15, The University of Western Australia, Department of Economics.
    19. Stefan Thewissen & Chen Wang & Olaf van Vliet, 2013. "Sectoral trends in earnings inequality and employment International trade, skill-biased technological change, or labour market institutions?," LIS Working papers 595, LIS Cross-National Data Center in Luxembourg.
    20. Ayal Kimhi & Moran Sandel, 2011. "Religious Schooling, Secular Schooling, and Household Income Inequality in Israel," Working Papers 29, AlmaLaurea Inter-University Consortium.
    21. repec:bla:econom:v:84:y:2017:i:334:p:157-179 is not listed on IDEAS
    22. Chris Belfield & Richard Blundell & Jonathan Cribb & Andrew Hood & Robert Joyce, 2017. "Two Decades of Income Inequality in Britain: The Role of Wages, Household Earnings and Redistribution," Economica, London School of Economics and Political Science, vol. 84(334), pages 157-179, April.
    23. Salverda, Wiemer & Checchi, Daniele, 2014. "Labour-Market Institutions and the Dispersion of Wage Earnings," IZA Discussion Papers 8220, Institute for the Study of Labor (IZA).
    24. ERREYGERS, Guido & KESSELS, Roselinde, 2013. "Regression-based decompositions of rank-dependent indicators of socioeconomic inequality of health," Working Papers 2013007, University of Antwerp, Faculty of Applied Economics.

    More about this item

    Keywords

    inequality; decomposition;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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