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Gini decompositions and Gini elasticities: On measuring the importance of income sources and population subgroups for income inequality

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  • Jurkatis, Simon
  • Strehl, Wolfgang

Abstract

This paper points to flaws in Gini decompositions by income sources and population subgroups and to common pitfalls in the interpretation of decomposition results, focusing on methods within the framework of Rao (1969). We argue that within this framework Gini elasticities may provide the only meaningful way to examine the relevance of income sources or population subgroups for total income inequality. Moreover, we show that existing methods are unsuitable to decompose the trend in the Gini coefficient and provide a coherent method to decompose the Gini trend by income sources. We add to the recent trend of multi-decompositions by deriving Gini elasticities from a simultaneous decomposition by income sources and population subgroups.

Suggested Citation

  • Jurkatis, Simon & Strehl, Wolfgang, 2014. "Gini decompositions and Gini elasticities: On measuring the importance of income sources and population subgroups for income inequality," Discussion Papers 2014/22, Free University Berlin, School of Business & Economics.
  • Handle: RePEc:zbw:fubsbe:201422
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    References listed on IDEAS

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    Cited by:

    1. Ogwang Tomson, 2016. "The Marginal Effects in Subgroup Decomposition of the Gini Index," Journal of Official Statistics, Sciendo, vol. 32(3), pages 733-745, September.

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    More about this item

    Keywords

    income inequality; Gini decomposition; Gini elasticity; income sources; population subgroups; multi-decomposition;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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