On the Decomposition of Economic Inequality: A Methodology and an Application to Tunisia

Hatem Jemmali () and Amara Mohamed ()
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Hatem Jemmali: University of Tunis El-Manar

No 1096, Working Papers from Economic Research Forum

Abstract: The paper provides a detailed examination of the structure and dynamics of economic inequality in Tunisia by using harmonized micro-data from national household budget surveys for 2005 and 2010. It assesses the levels and drivers of urban-rural and littoral-inland disparities employing the Firpo et al. (2009) method. The main findings reveal that, in contrast to the decrease in within-region inequality, the between-region inequality has increased slightly over the considered period. Disparities in households’ endowments such as human capital, demographic composition, and regional location appear as the main sources of the urban–rural welfare gap, while the coastal-inland is driven mainly by the differences in returns to human capital. Giving these results, any policy intervention aiming at mitigating the impact of economic inequality among regions must consider these key factors to give more chances to next generations to spring out of the poverty and inequality lived by their parents.

Pages: 24
Date: 2017-18-05, Revised 2017
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