Multidimensional Inequality Across Three Developed Countries

16 Pages Posted: 24 Sep 2018

See all articles by Nicholas Rohde

Nicholas Rohde

Griffith University

Ross S. Guest

Griffith University - School of Accounting and Finance - Gold Coast Campus

Date Written: September 2018

Abstract

This paper produces comparable estimates of multidimensional inequality for the U.S., Germany, and Australia. Two alternative approaches with differing interpretations are employed. The first method projects all facets of welfare onto a single variable which is then analyzed using standard univariate techniques. The second approach establishes equivalent‐income distributions that would lead to an equalization of welfare, such that the difference between this counterfactual and the true income distribution can be measured. This difference is then interpreted as the degree of income redistribution required to offset welfare inequality. Using data on permanent incomes, health scores, years of education, and leisure times, we observe much higher levels of inequality in the U.S. than in Germany or Australia. Our results are highly statistically significant and hold over a large variety of weighting specifications.

Keywords: distribution, equivalent income, multidimensional indices, welfare

JEL Classification: D31, D63

Suggested Citation

Rohde, Nicholas and Guest, Ross, Multidimensional Inequality Across Three Developed Countries (September 2018). Review of Income and Wealth, Vol. 64, Issue 3, pp. 576-591, 2018. Available at SSRN: https://ssrn.com/abstract=3254457 or http://dx.doi.org/10.1111/roiw.12292

Nicholas Rohde (Contact Author)

Griffith University

170 Kessels Road
Nathan, QLD 4111
Australia

Ross Guest

Griffith University - School of Accounting and Finance - Gold Coast Campus ( email )

PMB 50 Gold Coast Mail Centre
9726 Queensland
Australia

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