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Household Characteristics and the Distribution of Income In Italy: An Application of Social Distance Measures

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  • Conchita D’ambrosio

Abstract

The Lorenz criterion of preferable distributions fails to distinguish adequately between convergence to the global mean and clustering around local means. This concern has motivated independent work by Wolfson, and Esteban and Ray on the notion of polarization. In this paper I build on this recent work by providing a new method that characterizes changes in the entire distribution, rather than focussing only on dispersion. In particular, the approach proposed offers a new decomposition method of within‐ and between‐group components that differs from the classical method of additively decomposable inequality indices. The new method can monitor which factors modified the entire distribution, where precisely on the distribution these factors had an effect, and what determined the variation in the level of social distance between groups or geographic areas. Summary statistics of the observed movements and of distance between and divergence among the estimated and the counterfactual distributions are provided as well as a new index of social distance. The new method is then applied to Italian data on income distribution between 1987 and 1995.

Suggested Citation

  • Conchita D’ambrosio, 2001. "Household Characteristics and the Distribution of Income In Italy: An Application of Social Distance Measures," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(1), pages 43-64, March.
    • Handle: RePEc:bla:revinw:v:47:y:2001:i:1:p:43-64
    DOI: 10.1111/1475-4991.00003
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    Cited by:

    1. Mogues, Tewodaj, 2008. "A two-dimensional measure of polarization:," IFPRI discussion papers 837, International Food Policy Research Institute (IFPRI).
    2. Jérôme Lefranc, 2012. "Polarisation et déclin de la classe moyenne : le cas de la Russie," Post-Print halshs-00775929, HAL.
    3. Stefananescu, Stefan, 2008. "Measuring the Socio-Economic Bipolarization Phenomenon," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 5(1), pages 149-161, March.
    4. CROCI ANGELINI Elisabetta & D'AMBROSIO Conchita & FARINA Francesco, 2001. "Do Preferences in EU Member-States Support Fiscal Federalism?," IRISS Working Paper Series 2002-01, IRISS at CEPS/INSTEAD.
    5. Conchita D’Ambrosio & Edward N. Wolff, 2006. "Is Wealth Becoming More Polarized in the United States?," Chapters, in: Edward N. Wolff (ed.), International Perspectives on Household Wealth, chapter 12, Edward Elgar Publishing.
    6. Azomahou, Théophile T. & Diene, Mbaye, 2012. "Polarization patterns in economic development and innovation," Structural Change and Economic Dynamics, Elsevier, vol. 23(4), pages 421-436.
    7. Carlos Gradín & Máximo Rossi, 2006. "Income distribution and income sources in Uruguay," Journal of Applied Economics, Universidad del CEMA, vol. 9, pages 49-69, May.
    8. Ramani Gunatilaka & Duangkamon Chotikapanich & Brett Inder, 2006. "Impact of Structural Change in Education, Industry and Infrastructure on Income Distribution in Sri Lanka," Monash Econometrics and Business Statistics Working Papers 21/06, Monash University, Department of Econometrics and Business Statistics.
    9. Jérôme Lefranc, 2012. "Polarisation et déclin de la classe moyenne : le cas de la Russie," Documents de travail du Centre d'Economie de la Sorbonne 12054, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    10. Walter Bossert & William Schworm, 2008. "A Class of Two‐Group Polarization Measures," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(6), pages 1169-1187, December.
    11. Axel Schmidt, 2002. "Statistical Measurement of Income Polarization. A cross-national comparison," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 D3-1, International Conferences on Panel Data.
    12. Riccardo Massari, 2009. "Is income becoming more polarized Italy? A closer look with a distributional approach," Working Papers 1, Doctoral School of Economics, Sapienza University of Rome.
    13. Chiara Gigliarano & Karl Mosler, 2009. "Constructing indices of multivariate polarization," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 7(4), pages 435-460, December.
    14. Juan Gabriel Rodríguez, 2004. "Measuring polarization, inequality, welfare and poverty," Economic Working Papers at Centro de Estudios Andaluces E2004/75, Centro de Estudios Andaluces.
    15. Eckart Bomsdorf & Clemens Otto, 2007. "A new approach to the measurement of polarization for grouped data," AStA Advances in Statistical Analysis, Springer;German Statistical Society, vol. 91(2), pages 181-196, August.
    16. Carlos Gradín & Máximo Rossi, 2001. "The distribution of income in Uruguay: the effects of economic and institutional reforms," Documentos de Trabajo (working papers) 0301, Department of Economics - dECON.

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