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Income Distributions and Decomposable Divergence Measures

Brice Magdalou and Richard Nock ()
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Richard Nock: CEREGMIA, Université des Antilles et de la Guyane

No 2010-01, Documents de Travail from CEREGMIA, Université des Antilles et de la Guyane

Abstract: Inequality indices (i) evaluate the divergence between the income distribution and the hypothetical situation where all individuals have the mean income and (ii) are unambiguously reduced by a Pigou-Dalton progressive transfer. This paper proposes a new approach to evaluate the divergence between any two income distributions, where the second one can be a reference distribution for the first. In the case where the reference distribution is perfectly egalitarian, and uniquely in this case, we assume (i) that any progressive transfer reduces the divergence and (ii) that the divergence can be additively separated between inequality and efficiency loss. We characterize the unique class of decomposable divergence measures consistent with these views, and we derive the associated relative (resp. absolute) subclasses, which express constant relative (resp. absolute) inequality aversion. This approach extends the generalized entropy studied in inequality measurement.

Keywords: Inequality measures; progressive transfers; generalized entropy; information theory; Bregman divergences (search for similar items in EconPapers)
JEL-codes: D31 D63 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2010-04
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www2.univ-ag.fr/RePEc/DT/DT2010-01_Magdalou_Nock.pdf First version, 2010 (application/pdf)
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Related works:
Journal Article: Income distributions and decomposable divergence measures (2011) Downloads
Working Paper: Income distributions and decomposable divergence measures (2011) Downloads
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