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Subgroup Decomposition of the Gini Coefficient: A New Solution to an Old Problem

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  • Vesa-Matti Heikkuri

    (Tampere University)

  • Matthias Schief

    (Economics Department, OECD)

Abstract

We derive a novel decomposition of the Gini coefficient into within and between group inequality terms that sum to the aggregate Gini coefficient. This decomposition is derived from a set of axioms that ensure desirable behavior for the within and between-group inequality terms. The decomposition of the Gini coefficient is unique given our axioms, easy to compute, and can be interpreted geometrically.

Suggested Citation

  • Vesa-Matti Heikkuri & Matthias Schief, 2024. "Subgroup Decomposition of the Gini Coefficient: A New Solution to an Old Problem," Working Papers 30, Finnish Centre of Excellence in Tax Systems Research.
    • Handle: RePEc:fit:wpaper:30
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    References listed on IDEAS

    as
    1. Charles Blackorby & David Donaldson & Maria Auersperg, 1981. "A New Procedure for the Measurement of Inequality within and among Population Subgroups," Canadian Journal of Economics, Canadian Economics Association, vol. 14(4), pages 665-685, November.
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