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Exactly How has Income Inequality Changed? Patterns of Distributional Change in Core Societies


  • Arthur Alderson


  • Jason Beckfield
  • Francois Nielsen


The recent resurgence of income inequality in some of the core societies has spawned a wide-ranging debate as to the culprits. Progress in this debate has been complicated by the fact that many of the theories that have been developed to account for the inequality upswing imply radically different patterns of distributional change, while predicting the same outcome in terms of the behavior of standard summary measures (e.g., a rise in the Gini coefficient or in Theil's inequality). Handcock and Morris (1999) have developed methods that allow the analyst to precisely identify patterns of distributional change and a set of summary measures to characterize such changes. These are based on the relative distribution, defined for our purposes as the ratio of the fraction of households in the baseline year to the fraction of households in the comparison year in each decile of the distribution of income. We use the available high-quality data from the Luxemburg Income Study to explore the evolution of household income inequality in sixteen core societies. We describe exactly how inequality grew in some core societies since the late 1960s and discuss the extent to which patterns of distributional change were homogeneous or heterogeneous across the core. We find that 1) rising inequality is generally associated with polarization, rather than upgrading or downgrading alone, 2) among those societies experiencing the largest increases in inequality, upgrading typically takes precedence over downgrading in the course of such polarization, and 3) declining inequality, where it occurs, has been the result of convergence, with the magnitude of the shift from the lower tail to the middle exceeding that of the shift from upper tail to the middle.

Suggested Citation

  • Arthur Alderson & Jason Beckfield & Francois Nielsen, 2005. "Exactly How has Income Inequality Changed? Patterns of Distributional Change in Core Societies," LIS Working papers 422, LIS Cross-National Data Center in Luxembourg.
  • Handle: RePEc:lis:liswps:422

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    References listed on IDEAS

    1. Agell, Jonas, 1999. "On the Benefits from Rigid Labour Markets: Norms, Market Failures, and Social Insurance," Economic Journal, Royal Economic Society, vol. 109(453), pages 143-164, February.
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    Cited by:

    1. Richard V. Burkhauser & Shuaizhang Feng & Stephen P. Jenkins, 2009. "Using The P90-P10 Index To Measure U.S. Inequality Trends With Current Population Survey Data: A View From Inside The Census Bureau Vaults," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(1), pages 166-185, March.
    2. Clementi, Fabio & Molini, Vasco & Schettino, Francesco, 2018. "All that Glitters is not Gold: Polarization Amid Poverty Reduction in Ghana," World Development, Elsevier, vol. 102(C), pages 275-291.
    3. Ilaria Petrarca & Roberto Ricciuti, 2015. "Relative income distribution in six European countries: market and disposable income," LIS Working papers 629, LIS Cross-National Data Center in Luxembourg.
    4. Louis Chauvel, 2014. "The Intensity and Shape of Inequality: The ABG Method of Distributional Analysis," LIS Working papers 609, LIS Cross-National Data Center in Luxembourg.
    5. Josh Curtis & Robert Andersen, 2015. "How Social Class Shapes Attitudes on Economic Inequality: The Competing Forces of Self-Interest and Legitimation," LIS Working papers 644, LIS Cross-National Data Center in Luxembourg.

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