On decomposing inequality and poverty changes over time: A multi-dimensional decomposition

Mauro Mussini

Economic Modelling, 2013, vol. 33, issue C, 8-18

Abstract: The paper proposes a multi-dimensional decomposition of the changes in the Gini inequality index and the Sen–Shorrocks–Thon poverty index over time. The link among inequality change, re-ranking of individuals and income growth is explained by isolating the source and subgroup contributions to the determinants of the inequality change over time. We show that the poverty change over time depends on the re-ranking of individuals and the change in relative disparities among poverty gaps. These determinants of the change in poverty inequality are then decomposed by source and subgroup, yielding a three-way decomposition which combines time, source and subgroup ways of decomposing. An application to Italian household income data illustrates the proposed decomposition.

Keywords: Decomposition; Gini index; Sen–Shorrocks–Thon index; Population subgroup; Income source; Re-ranking; Income growth (search for similar items in EconPapers)
JEL-codes: C43 D31 D63 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:33:y:2013:i:c:p:8-18

DOI: 10.1016/j.econmod.2013.03.010

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