This paper proposes a decomposition of the change in inequality from the perspective of income groups. For every dichotomisation of the income distribution into poorer and richer parts, the decomposition allows to detect the changes in the relative income gap between the two parts and the reranking between poorer and richer individuals. This decomposition approach is particularly suitable when analysts split the population between individuals initially below the poverty line and those above the poverty line, since the decomposition allows to capture the effects of reranking and disproportional growth in income between poor and non-poor individuals and to compare these effects with those detected for the entire population. An application to Italian income data illustrates the proposed decomposition.

Decomposing Inequality Change from the Perspective of Reranking and Income Growth between Income Groups

MUSSINI, Mauro
2014-01-01

Abstract

This paper proposes a decomposition of the change in inequality from the perspective of income groups. For every dichotomisation of the income distribution into poorer and richer parts, the decomposition allows to detect the changes in the relative income gap between the two parts and the reranking between poorer and richer individuals. This decomposition approach is particularly suitable when analysts split the population between individuals initially below the poverty line and those above the poverty line, since the decomposition allows to capture the effects of reranking and disproportional growth in income between poor and non-poor individuals and to compare these effects with those detected for the entire population. An application to Italian income data illustrates the proposed decomposition.
Reranking; Poverty measurement; 'economic growth'; 'income distribution' 'wealth distribution'
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11562/708763
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