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Factor decomposition of spatial income inequality: a revision

  • Juan Antonio Duro

    ()

    (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)

Duro and Esteban (1998) proposed an additive decomposition of Theil populationweighted index by four income multiplicative factors (in spatial contexts). This note makes some additional methodological points: first, it argues that interaction effects are taken into account in the factoral indexes although only in a fairly restrictive way. As a consequence, we suggest to rewrite the decomposition formula as a sum of strict Theil indexes plus the interactive terms; second, it might be instructive to aggregate some of the initial factors; third, this decomposition can be immediately extended to the between- and within-group components.

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File URL: http://www.ecap.uab.es/RePEc/doc/wpdea0302.pdf
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Paper provided by Department of Applied Economics at Universitat Autonoma of Barcelona in its series Working Papers with number wpdea0302.

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Length: 10 pages
Date of creation: Feb 2003
Date of revision:
Handle: RePEc:uab:wprdea:wpdea0302
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  1. Theil, Henri & Sorooshian, Cyrus, 1979. "Components of the change in regional inequality," Economics Letters, Elsevier, vol. 4(2), pages 191-193.
  2. Ram Rati, 1992. "International inequalities in human development and real income," Economics Letters, Elsevier, vol. 38(3), pages 351-354, March.
  3. Theil, Henri, 1979. "The measurement of inequality by components of income," Economics Letters, Elsevier, vol. 2(2), pages 197-199.
  4. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-25, April.
  5. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-20, July.
  6. Goerlich Gisbert, Francisco J., 2001. "On factor decomposition of cross-country income inequality: some extensions and qualifications," Economics Letters, Elsevier, vol. 70(3), pages 303-309, March.
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