Factor decomposition of cross-country income inequality with interaction effects

Bruno Bracalente and Cristiano Perugini

No 54/2008, Quaderni del Dipartimento di Economia, Finanza e Statistica from Università di Perugia, Dipartimento Economia

Abstract: In this paper we propose a decomposition of the Theil measures of per capita income inequality which accounts for interaction effects between its multiplicative factors. Our theoretical findings, supported by an empirical application referring to EU-25 countries, suggest that neglecting these effects may strongly bias the relative importance of some factors, with consequent misleading policy implications.

Keywords: Inequality; Decomposition; Interaction Effects (search for similar items in EconPapers)
JEL-codes: C10 D63 O10 (search for similar items in EconPapers)
Pages: 6 pages
Date: 2008-04-17
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Citations: View citations in EconPapers (7)

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