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Measuring Income Inequality in Euroland

  • Beblo, Miriam

    (Centre for European Economic Research, Mannheim, Germany)

  • Knaus, Thomas

    (Free University of Berlin, Germany)

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    In this paper we propose an aggregate measure of income inequality for the founding countries of the European monetary union. Applying the methodology of the Theil index we are able to derive a measure for Euroland as a whole by exploiting information from two data sets: the European Community Household Panel and the Luxembourg Income Study. The property of additive decomposability allows us to determine each country's contribution as well as that of each demographic group to overall income inequality. In addition the impact of government transfers on this inequality measure is assessed.

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    Paper provided by IRISS at CEPS/INSTEAD in its series IRISS Working Paper Series with number 2000-10.

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    Date of creation: Oct 2000
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    Publication status: Published in Review of Income and Wealth, 2001, vol. 47, no. 3,pp. 301-320
    Handle: RePEc:irs:iriswp:2000-10
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    1. Atkinson, A.B., 1995. "Income Distribution in Europe and United States," Economics Papers 103, Economics Group, Nuffield College, University of Oxford.
    2. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-20, July.
    3. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
    4. Theil, Henri & Theil, Henri, 1979. "World income inequality and its components," Economics Letters, Elsevier, vol. 2(1), pages 99-102.
    5. Kraus, Margit, 2000. "Social security strategies and redistributive effects in European social transfer systems," ZEW Discussion Papers 00-40, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. Theil, Henri, 1979. "The measurement of inequality by components of income," Economics Letters, Elsevier, vol. 2(2), pages 197-199.
    7. Cowell, Frank A, 1980. "On the Structure of Additive Inequality Measures," Review of Economic Studies, Wiley Blackwell, vol. 47(3), pages 521-31, April.
    8. A B Atkinson, 1995. "Income Distribution in Europe and the United States," Economics Papers 13 & 103., Economics Group, Nuffield College, University of Oxford.
    9. Berry, Albert & Bourguignon, Francois & Morrisson, Christian, 1983. "The Level of World Inequality: How Much Can One Say?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 29(3), pages 217-41, September.
    10. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-25, April.
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