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Non-Hierarchical Bivariate Decomposition of Theil Indexes

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Abstract

This paper develops a method to conduct non-hierarchical bivariate decomposition of Theil indexes. The method has the merits that, first, it treats all variates symmetrically and therefore facilitates the comparison of inequalities associated with different variates; and, second, it highlights the interaction between variates in the creation of inequality. The method is applied to measure gender and ethnic income inequality in Australia.

Suggested Citation

  • Kam Ki Tang & Dennis Petrie, 2007. "Non-Hierarchical Bivariate Decomposition of Theil Indexes," CEPA Working Papers Series WP032007, School of Economics, University of Queensland, Australia.
  • Handle: RePEc:qld:uqcepa:26
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    File URL: https://economics.uq.edu.au/files/5067/WP032007.pdf
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    1. Cowell, Frank A. & Kuga, Kiyoshi, 1981. "Additivity and the entropy concept: An axiomatic approach to inequality measurement," Journal of Economic Theory, Elsevier, vol. 25(1), pages 131-143, August.
    2. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-625, April.
    3. Mishra, Padmaja & Parikh, Ashok, 1992. "Household Consumer Expenditure Inequalities in India: A Decomposition Analysis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 38(2), pages 225-236, June.
    4. Frank A. Cowell, 1980. "On the Structure of Additive Inequality Measures," Review of Economic Studies, Oxford University Press, vol. 47(3), pages 521-531.
    5. Pedro Conceicao & James K. Galbraith, 2000. "Constructing Long and Dense Time-Series of Inequality Using the Theil Index," Eastern Economic Journal, Eastern Economic Association, vol. 26(1), pages 61-74, Winter.
    6. Takahiro Akita, 2003. "Decomposing regional income inequality in China and Indonesia using two-stage nested Theil decomposition method," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 37(1), pages 55-77, February.
    7. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-920, July.
    8. Adelman, Irma & Levy, Amnon, 1984. "Decomposing Theil's Income of Income Inequality into Between and Within Components: A Note," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 30(1), pages 119-121, March.
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    Cited by:

    1. Takahiro Akita & Sachiko Miyata, 2013. "The roles of location and education in the distribution of economic well-being in Indonesia: hierarchical and non-hierarchical inequality decomposition analyses," Letters in Spatial and Resource Sciences, Springer, vol. 6(3), pages 137-150, November.
    2. Dorji Lethro & Takahiro Akita, 2019. "The roles of education in expenditure inequality in Bhutan: an analysis in an urban–rural context," Asia-Pacific Journal of Regional Science, Springer, vol. 3(2), pages 465-485, June.
    3. Takahiro Akita & Sachiko Miyata, 2018. "Spatial Inequalities in Indonesia, 1996–2010: A Hierarchical Decomposition Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 138(3), pages 829-852, August.
    4. Takahiro Akita, 2017. "Educational Expansion and the Role of Education in Expenditure Inequality in Indonesia Since the 1997 Financial Crisis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 130(3), pages 1165-1186, February.
    5. Takahiro Akita & Sachiko Miyata, 2020. "Urban and Rural Dimensions of the Role of Education in Inequality: A Comparative Analysis between Indonesia, Myanmar, and the Philippines," Working Papers EMS_2020_04, Research Institute, International University of Japan.

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    JEL classification:

    • D3 - Microeconomics - - Distribution
    • D6 - Microeconomics - - Welfare Economics

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