Inequality Decomposition - A Reconciliation

Cowell, Frank; Fiorio, Carlo V.

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Inequality Decomposition - A Reconciliation

LSE STICERD Research Paper No. DARP100

37 Pages Posted: 13 May 2009

See all articles by Frank Cowell

Frank Cowell

London School of Economics & Political Science (LSE) - Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)

Carlo V. Fiorio

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM)

Date Written: April 2009

Abstract

We show how classic source-decomposition and subgroup-decomposition methods can be reconciled with regression methodology used in the recent literature. We also highlight some pitfalls that arise from uncritical use of the regression approach. The LIS database is used to compare the approaches using an analysis of the changing contributions to inequality in the United States and Finland.

JEL Classification: D63

Suggested Citation: Suggested Citation

Cowell, Frank A. and Fiorio, Carlo V., Inequality Decomposition - A Reconciliation (April 2009). LSE STICERD Research Paper No. DARP100, Available at SSRN: https://ssrn.com/abstract=1401774