Factor Components of Inequality: Cross-Country Differences and Time Changes

Cecilia García-Peñalosa (), Richard Breen () and Elsa Orgiazzi ()

No 503, LIS Working papers from LIS Cross-National Data Center in Luxembourg

Abstract: Recent work on inequality has examined either changes in the distribution of income or in that of earnings, without examining how the latter affects the former. In this paper we perform a factor decomposition of income inequality in order to assess the importance of earnings and income from other sources in recent changes in inequality. We examine data for 8 industrial countries over the last three decades of the 20th century. Our findings indicate that although changes in the distribution of earnings are an important aspect of recent increases in inequality, they are not the only one. In some countries the contribution of self-employment income to inequality has been on the rise. In others, increases in inequality in capital income probably caused by tax changes account for a substantial fraction of changes in the distribution of income.

Keywords: income inequality; factor decomposition; decomposition by population sub groups (search for similar items in EconPapers)
JEL-codes: D31 D33 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2008-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in Cecilia García-Peñalosa, Elsa Orgiazzi, Factor Components of Inequality: A Cross?Country Study , Review of Income and Wealth 59, no.4 (2013): 689-727

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Persistent link: https://EconPapers.repec.org/RePEc:lis:liswps:503

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