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Two Types of Inequality: Inequality Between Persons and Inequality Between Subgroups

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  • Jasso, Guillermina

    () (New York University)

  • Kotz, Samuel

    () (George Washington University)

Abstract

Social scientists study two kinds of inequality: inequality between persons (as in income inequality) and inequality between subgroups (as in racial inequality). This paper analyzes the mathematical connections between the two kinds of inequality. The paper proceeds by exploring a set of two-parameter continuous probability distributions widely used in economic and sociological applications. We define a general inequality parameter, which governs all measures of personal inequality (such as the Gini coefficient), and we link this parameter to the gap (difference or ratio) between the means of subdistributions. In this way we establish that, at least in the two-parameter distributions analyzed here, and for the case of two nonoverlapping subgroups, as personal inequality increases, so does inequality between subgroups. This general inequality parameter also governs Lorenz dominance. Further, we explore the connection between subgroup inequality (in particular, the ratio of the bottom subgroup mean to the top subgroup mean) and decomposition of personal inequality into between-subgroup and within-subgroup components, focusing on an important decomposable measure, Theil’s MLD, and its operation in the Pareto case. This allows us to establish that all the quantities in the decomposition are monotonic functions of the general inequality parameter. Thus, the general inequality parameter captures the “deep structure” of inequality. We also introduce a whole-distribution graphical tool for assessing personal and subgroup inequality. Substantively, this work suggests that in at least some societies, characterized by special income distributions, whenever inequality disrupts social harmony and social cohesion, it attacks on two fronts, via subgroup inequality as well as personal inequality.

Suggested Citation

  • Jasso, Guillermina & Kotz, Samuel, 2007. "Two Types of Inequality: Inequality Between Persons and Inequality Between Subgroups," IZA Discussion Papers 2749, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp2749
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    References listed on IDEAS

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    1. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-625, April.
    2. T. Paul Schultz, 1998. "Inequality in the distribution of personal income in the world: How it is changing and why," Journal of Population Economics, Springer;European Society for Population Economics, vol. 11(3), pages 307-344.
    3. Das, T & Parikh, A, 1982. "Decomposition of Inequality Measures and a Comparative Analysis," Empirical Economics, Springer, vol. 7(1-2), pages 23-48.
    4. Goldin, Claudia, 1992. "Understanding the Gender Gap: An Economic History of American Women," OUP Catalogue, Oxford University Press, number 9780195072709.
    5. Francine D. Blau & Lawrence M. Kahn, 2000. "Gender Differences in Pay," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 75-99, Fall.
    6. William Darity, Jr. & Ashwini Deshpande, 2000. "Tracing the Divide: Intergroup Disparity across Countries," Eastern Economic Journal, Eastern Economic Association, vol. 26(1), pages 75-85, Winter.
    7. Susan Harkness, 1996. "The gender earnings gap: evidence from the UK," Fiscal Studies, Institute for Fiscal Studies, vol. 17(2), pages 1-36, May.
    8. Kwok Leung & Peter B Smith & Zhongming Wang & Haifa Sun, 1996. "Job Satisfaction in Joint Venture Hotels in China: An Organizational Justice Analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(4), pages 947-962, December.
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    10. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-920, July.
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    12. Kwok Leung & Peter B Smith & Zhongming Wang & Haifa Sun, 1996. "Job Satisfaction in Joint Venture Hotels in China: An Organizational Justice Analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(5), pages 947-962, December.
    13. Barbara F. Reskin & Denise D. Bielby, 2005. "A Sociological Perspective on Gender and Career Outcomes," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 71-86, Winter.
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    Cited by:

    1. Jurgen Faik & Uwe Fachinger, 2013. "The decomposition of well-being categories: An application to Germany," Working Papers 307, ECINEQ, Society for the Study of Economic Inequality.

    More about this item

    Keywords

    coefficient of variation; Theil’s MLD; Atkinson measure; Gini coefficient; power-function distribution; Pareto; lognormal; two-parameter; continuous univariate; Lorenz curve; decomposition of nequality measures; between component; within component;

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C16 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Econometric and Statistical Methods; Specific Distributions
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D6 - Microeconomics - - Welfare Economics
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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