Further Results on the Regression-Based Approach to Inequality Decomposition with Evidence from India

34 Pages Posted: 20 Nov 2014

See all articles by Maurizio Bigotta

Maurizio Bigotta

University of Geneva

Jaya Krishnakumar

University of Geneva

Uma Rani

International Labour Organization (ILO)

Date Written: November 18, 2014

Abstract

The paper revisits regression-based inequality decomposition, derives further theoretical results on the factor shares and applies them in an empirical setting. Noting that the approach based on Shorrocks and Fields is not directly applicable to an important welfare-based inequality index, namely Atkinson’s inequality index, we generalise it to derive shares for this index. We also derive the asymptotic distribution of all share estimators for obtaining their standard errors necessary for drawing inference. Finally, we use our theoretical results to examine the major factors that contribute to income inequality in India. Our results show that education and household size are the two most dominant factors contributing to income inequality in both rural and urban areas, followed by employment status and regional differences.

Keywords: Income inequality, Regression-based decompositions, Education, Labour status, India

JEL Classification: D63, C21, J24

Suggested Citation

Bigotta, Maurizio and Krishnakumar, Jaya and Rani, Uma, Further Results on the Regression-Based Approach to Inequality Decomposition with Evidence from India (November 18, 2014). Empirical Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2527017

Maurizio Bigotta

University of Geneva ( email )

102 Bd Carl-Vogt
Genève, CH - 1205
Switzerland

Jaya Krishnakumar (Contact Author)

University of Geneva ( email )

40 Bd. du Pont d'Arve
Genève 4, CH - 1211
Switzerland

Uma Rani

International Labour Organization (ILO) ( email )

Route des Morillons 4
Geneva
Switzerland

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