A Review of Decomposition of Income Inequality

29 Pages Posted: 2 Aug 2004

See all articles by Almas Heshmati

Almas Heshmati

Sogang University; Jönköping International Business School

Date Written: July 2004


This paper is a review of recent developments of parametric and non-parametric approaches to decompose inequality by subgroups, income sources, causal factors and other unit characteristics. Different methods of decomposing changes in poverty into growth, redistribution, poverty standard and residual components are described. In parametric approaches the dynamics of income accounting for transitory and permanent changes in individual and household earnings conditional of various covariates are also reviewed. Statistical inferences for inequality measurement including delta and bootstrapping and other methods to provide estimates of the sampling distribution are presented. These issues are important in the design of policy measures and expectations about their impacts on earnings inequality and poverty reductions.

Keywords: income inequality, poverty, decomposition, parametric, non-parametric, Gini index

JEL Classification: C10, D31, I32, N30

Suggested Citation

Heshmati, Almas, A Review of Decomposition of Income Inequality (July 2004). Available at SSRN: https://ssrn.com/abstract=571703 or http://dx.doi.org/10.2139/ssrn.571703

Almas Heshmati (Contact Author)

Sogang University ( email )

Seoul 121-742
Korea, Republic of (South Korea)
0082-2-705-8771 (Phone)

HOME PAGE: http://www.sogang.ac.kr/english/academic/03_under_0123.html

Jönköping International Business School ( email )

Jönköping, 551 11

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