The Gini Coefficient Reveals More

Peter J. Lambert () and André Decoster
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Peter J. Lambert: University of Oregon Economics Department

University of Oregon Economics Department Working Papers from University of Oregon Economics Department

Abstract: We revisit the well-known decomposition of the Gini coefficient into between-groups, within-groups and overlap terms in the context of two groups in which the incomes in one group may be scaled and that groupÂ’s population weight modified. In this more general setting than usual, we focus on the properties of the overlap term, proving inter alia that overlap unambiguously reduces as a result of a within-group progressive transfer, and is increased by scaling up the incomes in the group with the lower mean, reaching a maximum when the two means become the same. In the case of a socially heterogeneous population and equivalized incomes, the effect on the Gini overlap of changing the income unit is determined, along with that of adjusting the equivalence scale deflator in case the income unit is the equivalent adult (such adjustment simultaneously changing the weighting of income units). Relationships of the findings to existing literature are thoroughly explored.

Keywords: Gini decomposition; inequality decomposition; Gini residual (search for similar items in EconPapers)
JEL-codes: D63 (search for similar items in EconPapers)
Pages: 21
Date: 2004-12-05, Revised 2004-12-05
New Economics Papers: this item is included in nep-ltv
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Related works:
Journal Article: The Gini coefficient reveals more (2005)
Working Paper: The Gini Coefficient Reveals More (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ore:uoecwp:2004-18

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