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Measuring and explaining economic inequality: An extension of the Gini coefficient

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  • Chameni Nembua, Célestin

Abstract

This paper proposes a new class of inequality indices based on the Gini’s coefficient. The properties of the indices are studied and in particular they are found to be regular, relative and satisfy the Pigou-Dalton transfer principle. A subgroup decomposition is performed and the method is found to be similar to the one used by Dagum when decomposing the Gini index. The theoretical results are illustrated by case studies, using Cameroonian data.

Suggested Citation

  • Chameni Nembua, Célestin, 2008. "Measuring and explaining economic inequality: An extension of the Gini coefficient," MPRA Paper 31242, University Library of Munich, Germany, revised 2010.
  • Handle: RePEc:pra:mprapa:31242
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    File URL: https://mpra.ub.uni-muenchen.de/31242/1/MPRA_paper_31242.pdf
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    References listed on IDEAS

    as
    1. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-625, April.
    2. Frank A. Cowell, 1980. "On the Structure of Additive Inequality Measures," Review of Economic Studies, Oxford University Press, vol. 47(3), pages 521-531.
    3. Shorrocks, Anthony F, 1984. "Inequality Decomposition by Population Subgroups," Econometrica, Econometric Society, vol. 52(6), pages 1369-1385, November.
    4. Chotikapanich, Duangkamon & Griffiths, William, 2001. "On Calculation of the Extended Gini Coefficient," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(4), pages 541-547, December.
    5. Stéphane Mussard & Michel Terraza & Françoise Seyte, 2003. "Decomposition of Gini and the generalized entropy inequality measures," Economics Bulletin, AccessEcon, vol. 4(7), pages 1-6.
    6. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-920, July.
    7. Dagum, Camilo, 1997. "A New Approach to the Decomposition of the Gini Income Inequality Ratio," Empirical Economics, Springer, vol. 22(4), pages 515-531.
    8. repec:ebl:ecbull:v:4:y:2003:i:3:p:1-5 is not listed on IDEAS
    9. Yitzhaki, Shlomo, 1983. "On an Extension of the Gini Inequality Index," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(3), pages 617-628, October.
    10. Stephane Mussard, 2004. "The bidimensional decomposition of the Gini ratio. A case study: Italy," Applied Economics Letters, Taylor & Francis Journals, vol. 11(8), pages 503-505.
    11. repec:ebl:ecbull:v:4:y:2003:i:7:p:1-6 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Measuring inequality; Generalisation of the Gini index; Pigou-Dalton’s transfer; Subgroup decomposition.;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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