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Inequality Decompositions ?A Reconciliation

  • Frank A. Cowell


    (London School of Economics and STICERD)

  • Carlo V. Fiorio

    (University of Milan and Econpubblica)

We show how classic source-decomposition and subgroup-decomposition methods can be reconciled with regression methodology used in the recent literature. We also highlight some pitfalls that arise from uncritical use of the regression approach. The LIS database is used to compare the approaches using an analysis of the changing contributions to inequality in the United States and Finland.

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Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 117.

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Length: 34 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:inq:inqwps:ecineq2009-117
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  1. Mª Casilda Lasso de la Vega & Ana Marta Urrutia, 2005. "Path independent multiplicatively decomposable inequality measures," Investigaciones Economicas, Fundación SEPI, vol. 29(2), pages 379-387, May.
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  4. Bourguignon, F. & Fournier, M. & Gurgand, M., 2000. "Fast Development with a Stable Income Distribution: Taiwan, 1979-1994," DELTA Working Papers 2000-07, DELTA (Ecole normale supérieure).
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  7. Arthur Charpentier & Stéphane Mussard, 2010. "Income Inequality Games," Working Papers hal-00456573, HAL.
  8. Jenkins, Stephen P, 1995. "Accounting for Inequality Trends: Decomposition Analyses for the UK, 1971-86," Economica, London School of Economics and Political Science, vol. 62(245), pages 29-63, February.
  9. Chris Elbers & Peter Lanjouw & Johan Mistiaen & Berk Özler, 2008. "Reinterpreting between-group inequality," Journal of Economic Inequality, Springer, vol. 6(3), pages 231-245, September.
  10. 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 665-85, November.
  11. Fields, Gary S & Yoo, Gyeongjoon, 2000. "Falling Labor Income Inequality in Korea's Economic Growth: Patterns and Underlying Causes," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(2), pages 139-59, June.
  12. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
  13. Bourguignon, Francois & Fournier, M & Gurgand, M, 2001. "Fast Development with a Stable Income Distribution: Taiwan, 1979-94," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(2), pages 139-63, June.
  14. Jonathan Morduch & Terry Sicular, 2002. "Rethinking Inequality Decomposition, With Evidence from Rural China," Economic Journal, Royal Economic Society, vol. 112(476), pages 93-106, January.
  15. Casilda Lasso de la Vega & Ana Urrutia, 2008. "The ‘Extended’ Atkinson family: The class of multiplicatively decomposable inequality measures, and some new graphical procedures for analysts," Journal of Economic Inequality, Springer, vol. 6(2), pages 211-225, June.
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  17. Cowell, Frank A, 1988. "Inequality Decomposition: Three Bad Measures," Bulletin of Economic Research, Wiley Blackwell, vol. 40(4), pages 309-12, October.
  18. Mercedes Sastre & Alain Trannoy, 2002. "Shapley inequality decomposition by factor components: Some methodological issues," Journal of Economics, Springer, vol. 77(1), pages 51-89, December.
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  20. Cowell, Frank A., 1989. "Sampling variance and decomposable inequality measures," Journal of Econometrics, Elsevier, vol. 42(1), pages 27-41, September.
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  22. Paul, Satya, 2004. "Income sources effects on inequality," Journal of Development Economics, Elsevier, vol. 73(1), pages 435-451, February.
  23. Foster, James E. & Shneyerov, Artyom A., 2000. "Path Independent Inequality Measures," Journal of Economic Theory, Elsevier, vol. 91(2), pages 199-222, April.
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  25. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-20, July.
  26. Andrea Brandolini & Timothy M. Smeeding, 2007. "Inequality Patterns in Western-Type Democracies: Cross-Country Differences and Time Changes," CHILD Working Papers wp08_07, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
  27. Carlo Fiorio & Stephen Jenkins, 2007. "Regression-based inequality decomposition," United Kingdom Stata Users' Group Meetings 2007 03, Stata Users Group.
  28. Shorrocks, Anthony F, 1984. "Inequality Decomposition by Population Subgroups," Econometrica, Econometric Society, vol. 52(6), pages 1369-85, November.
  29. James E. Foster & Artyom A. Shneyerov, 1999. "A general class of additively decomposable inequality measures," Economic Theory, Springer, vol. 14(1), pages 89-111.
  30. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
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