The Individual Contribution to Income Inequality: Conceptual Analysis and Empirical Investigation

Abstract:     
The paper aims at proposing the study of the individual contribution to the income inequality. The role of individual positions in the analysis of inequality is recognized at various levels. It is also recognized the utility of inequality analysis concerned with the variation across the parts of a given income distribution, i.e. according to selected distribution percentiles (Hölscher, 2006; Milanovic, Ersado, 2005). The paper elaborates on this perspectives and proposes a definition of the individual contribution to the inequality level of a given income distribution. The problem posited by the departure form a person-by-person perspective (Howes, 1996; Sen, 1973) are at the basis of the identification of the concept and of its empirical utility. The concept of individual contribution is proposed and its properties are discussed. It is introduced and tested the hypothesis that, by the concept of individual contribution, patterns of influence of determinants of inequality can be identified across a given income distribution. An empirical investigation is proposed, based on Survey on Household Income and Wealth (Banca d’Italia) which is intended to test the hypothesis introduced. The results corroborate the conjecture and show that the patterns identified could contribute to the analysis of inequality.

Keywords: inequality, individual contribution, person-by-person perspective, inequality index sensitivity

JEL Classification: O1, O18

working papers series