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Decomposition of Rank-Dependent Measures of Inequality by Subgroups

The purpose of additive subgroup decomposition is to study the relationship between overall inequality and inequality within and between population subgroups defined by variables like gender, age, education and region of residence. As opposed to the inequality measures that are additively decomposable, the so-called generalized entropy family of inequality measures, the Gini coefficient does not admit decomposition into within- and between-group components but does also require an interaction (overlapping) term. The purpose of this paper is to introduce an alternative decomposition method that can be considered to be a parallel to Lerman and Yitzhaki’s (1985) elasticity approach for decomposing the Gini coefficient by income sources, which means that the elasticity of the Gini coefficient with respect to various income components is treated as the basic quantities of the decomposition method. Thus, rather than decomposing the Gini coefficient or any other inequality measure into a within-inequality term, a between-inequality term and eventually an interaction term, the basic quantities of the introduced method are the effects of marginal changes in variables that are used to specify the population subgroups

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Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 437.

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Date of creation: Oct 2005
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Handle: RePEc:ssb:dispap:437
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  1. Giovanni Maria Giorgi, 2005. "Bibliographic portrait of the Gini concentration ratio," Econometrics 0511004, EconWPA.
  2. Dagum, Camilo, 1997. "A New Approach to the Decomposition of the Gini Income Inequality Ratio," Empirical Economics, Springer, vol. 22(4), pages 515-31.
  3. Porath Elchanan Ben & Gilboa Itzhak, 1994. "Linear Measures, the Gini Index, and The Income-Equality Trade-off," Journal of Economic Theory, Elsevier, vol. 64(2), pages 443-467, December.
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  5. DONALDSON, David & WEYMARK, John A., . "Ethically flexible Gini indices for income distributions in the continuum," CORE Discussion Papers RP -520, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  8. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-56, February.
  9. Yitzhaki, Shlomo, 1994. "Economic distance and overlapping of distributions," Journal of Econometrics, Elsevier, vol. 61(1), pages 147-159, March.
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  11. Rolf Aaberge, 2000. "Characterizations of Lorenz curves and income distributions," Social Choice and Welfare, Springer, vol. 17(4), pages 639-653.
  12. Weymark, John A., 1981. "Generalized gini inequality indices," Mathematical Social Sciences, Elsevier, vol. 1(4), pages 409-430, August.
  13. Hardle, W. & Hall, P. & Ichimura, H., 1991. "Optimal smoothing in single index models," CORE Discussion Papers 1991007, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  14. Yaari, Menahem E, 1987. "The Dual Theory of Choice under Risk," Econometrica, Econometric Society, vol. 55(1), pages 95-115, January.
  15. Lambert, Peter J & Aronson, J Richard, 1993. "Inequality Decomposition Analysis and the Gini Coefficient Revisited," Economic Journal, Royal Economic Society, vol. 103(420), pages 1221-27, September.
  16. Mehran, Farhad, 1976. "Linear Measures of Income Inequality," Econometrica, Econometric Society, vol. 44(4), pages 805-09, July.
  17. Yitzhaki, Shlomo & Lerman, Robert I, 1991. "Income Stratification and Income Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 37(3), pages 313-29, September.
  18. Giovanni Maria Giorgi & Michele Crescenzi, 2005. "A proposal of poverty measures based on the Bonferroni inequality index," Econometrics 0507010, EconWPA.
  19. Donaldson, David & Weymark, John A., 1980. "A single-parameter generalization of the Gini indices of inequality," Journal of Economic Theory, Elsevier, vol. 22(1), pages 67-86, February.
  20. 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 107-15, February.
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