The literature offers two main ways of decomposing the Gini index: decomposition by population subgroup and by income source. This paper proposes merging the two decomposition dimensions by suggesting a matrix formula for the Gini index which permits the simultaneous decomposition by subgroup and by income source. Using this multi-decomposition, one can investigate the role of the interaction between the subgroup and the source components in determining the overall inequality.
A matrix approach to the Gini index decomposition by subgroup and by income source
MUSSINI, Mauro
2013-01-01
Abstract
The literature offers two main ways of decomposing the Gini index: decomposition by population subgroup and by income source. This paper proposes merging the two decomposition dimensions by suggesting a matrix formula for the Gini index which permits the simultaneous decomposition by subgroup and by income source. Using this multi-decomposition, one can investigate the role of the interaction between the subgroup and the source components in determining the overall inequality.
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