On measuring the importance of income sources and population subgroups for
Jurkatis, Simon; Strehl, Wolfgang
Year of publication:
This paper points to flaws in Gini decompositions by income sources and
population subgroups and to common pitfalls in the interpretation of
decomposition results, focusing on methods within the framework of Rao (1969).
We argue that within this framework Gini elasticities may provide the only
meaningful way to examine the relevance of income sources or population
subgroups for total income inequality. Moreover, we show that existing methods
are unsuitable to decompose the trend in the Gini coefficient and provide a
coherent method to decompose the Gini trend by income sources. We add to the
recent trend of multi-decompositions by deriving Gini elasticities from a
simultaneous decomposition by income sources and population subgroups.