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On Dagum’s Decomposition of the Gini Coefficient

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  • William Griffiths

Abstract

To measure the contributions to inequality from population subgroups, the Gini coefficient is often decomposed into inequality within groups, inequality between groups and a residual term arising from the overlapping of income distributions from different groups. In this paper we show that two decompositions presented separately in the literature, a traditional decomposition and a decomposition suggested by Dagum (1997), are identical, a fact not previously acknowledged in the literature

Suggested Citation

  • William Griffiths, 2008. "On Dagum’s Decomposition of the Gini Coefficient," Department of Economics - Working Papers Series 1054, The University of Melbourne.
  • Handle: RePEc:mlb:wpaper:1054
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    File URL: http://fbe.unimelb.edu.au/__data/assets/pdf_file/0007/802744/1054.pdf
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    References listed on IDEAS

    as
    1. Branko Milanovic, 2002. "True World Income Distribution, 1988 and 1993: First Calculation Based on Household Surveys Alone," Economic Journal, Royal Economic Society, vol. 112(476), pages 51-92, January.
    2. van de Ven, Justin & Creedy, John & Lambert, Peter J, 2001. " Close Equals and Calculation of the Vertical, Horizontal and Reranking Effects of Taxation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(3), pages 381-394, July.
    3. Dagum, Camilo, 1997. "A New Approach to the Decomposition of the Gini Income Inequality Ratio," Empirical Economics, Springer, vol. 22(4), pages 515-531.
    4. Lambert, Peter J & Aronson, J Richard, 1993. "Inequality Decomposition Analysis and the Gini Coefficient Revisited," Economic Journal, Royal Economic Society, vol. 103(420), pages 1221-1227, September.
    5. Silber, Jacques, 1989. "Factor Components, Population Subgroups and the Computation of the Gini Index of Inequality," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 107-115, February.
    6. Sastry, D V S & Kelkar, Ujwala R, 1994. "Note on the Decomposition of Gini Inequality," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 584-586, August.
    7. Yitzhaki, Shlomo, 1994. "Economic distance and overlapping of distributions," Journal of Econometrics, Elsevier, vol. 61(1), pages 147-159, March.
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    More about this item

    Keywords

    population subgroups; between inequality; within inequality;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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