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Inequality decomposition: a reconciliation

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  • Cowell, Frank
  • Fiorio, Carlo V.

Abstract

We show how classic source-decomposition and subgroup-decomposition methods can be reconciled with regression methodology used in the recent literature. We also highlight some pitfalls that arise from uncritical use of the regression approach. The LIS database is used to compare the approaches using an analysis of the changing contributions to inequality in the United States and Finland.

Suggested Citation

  • Cowell, Frank & Fiorio, Carlo V., 2009. "Inequality decomposition: a reconciliation," LSE Research Online Documents on Economics 25431, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:25431
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    References listed on IDEAS

    as
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    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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