Regression-based Inequality Decomposition: Pitfalls and a Solution Procedure

Guanghua Wan

No DP2002-101, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: This paper explores pitfalls in regression-based inequality decompositions. A simple procedure is developed for rectifying these pitfalls. The procedure does not impose any restrictions on the underlying regression model and it can be applied to any inequality measure(s). Once combined with conventional decomposition methods or the Shapley value approach of Shorrocks (1999), what is being proposed becomes a most general and powerful framework for regression-based in equality decomposition.

Keywords: Equality and inequality; Income distribution; Index numbers (Economics); Poverty measurement (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (49)

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