IDEAS home Printed from https://ideas.repec.org/a/spr/empeco/v47y2014i2p619-637.html
   My bibliography  Save this article

Decomposing inequality change from the perspective of reranking and income growth between income groups

Author

Listed:
  • Mauro Mussini

Abstract

This paper proposes a decomposition of the change in inequality from the perspective of income groups. For every dichotomisation of the income distribution into poorer and richer parts, the decomposition allows to detect the change in the relative income gap between the two parts and the reranking between poorer and richer individuals. This decomposition approach is particularly suitable when analysts split the population between the individuals initially below the poverty line and those above the poverty line, since the decomposition allows to capture the effects of reranking and disproportional growth in income between poor and non-poor individuals and to compare these effects with those detected for the entire population. An application to Italian income data illustrates the proposed decomposition. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Mauro Mussini, 2014. "Decomposing inequality change from the perspective of reranking and income growth between income groups," Empirical Economics, Springer, vol. 47(2), pages 619-637, September.
    • Handle: RePEc:spr:empeco:v:47:y:2014:i:2:p:619-637
    DOI: 10.1007/s00181-013-0749-7
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s00181-013-0749-7
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s00181-013-0749-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Stephen P. Jenkins & Philippe Van Kerm, 2006. "Trends in income inequality, pro-poor income growth, and income mobility," Oxford Economic Papers, Oxford University Press, vol. 58(3), pages 531-548, July.
    2. Christian Schluter & Mark Trede, 2003. "Local versus Global Assessment of Mobility," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(4), pages 1313-1335, November.
    3. repec:bla:obuest:v:63:y:2001:i:3:p:381-94 is not listed on IDEAS
    4. King, Mervyn A, 1983. "An Index of Inequality: With Applications to Horizontal Equity and Social Mobility," Econometrica, Econometric Society, vol. 51(1), pages 99-115, January.
    5. Francesco Devicienti, 2011. "Estimating poverty persistence in Britain," Empirical Economics, Springer, vol. 40(3), pages 657-686, May.
    6. Donal O'Neill & Philippe Van Kerm, 2008. "An Integrated Framework For Analysing Income Convergence," Manchester School, University of Manchester, vol. 76(1), pages 1-20, January.
    7. Pernia, Ernesto & Kakwani, Nanak, 2000. "What is Pro-poor Growth?," MPRA Paper 104987, University Library of Munich, Germany.
    8. Quentin Wodon, 2001. "Income mobility and risk during the business cycle: Comparing adjustments in labour markets in two Latin‐American countries," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 9(2), pages 449-461, July.
    9. Justin Van De Ven & John Creedy & Peter J. Lambert, 2001. "Close Equals and Calculation of the Vertical, Horizontal and Reranking Effects of Taxation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(3), pages 381-394, July.
    10. Kay I. Penny, 1996. "Appropriate Critical Values When Testing for a Single Multivariate Outlier by Using the Mahalanobis Distance," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 45(1), pages 73-81, March.
    11. Adam Wagstaff, 2009. "Reranking and Pro-Poor Growth: Decompositions for China and Vietnam," Journal of Development Studies, Taylor & Francis Journals, vol. 45(9), pages 1403-1425.
    12. Rolf Aaberge, 2007. "Gini’s nuclear family," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 5(3), pages 305-322, December.
    13. Jacques Silber & Paolo Verme, 2009. "Distributional change, reference groups and the measurement of relative deprivation," Working Papers 136, ECINEQ, Society for the Study of Economic Inequality.
    14. Jacques Silber & Michal Weber, 2005. "Gini's mean difference and the measurement of absolute mobility," Metron - International Journal of Statistics, Dipartimento di Statistica, Probabilità e Statistiche Applicate - University of Rome, vol. 0(3), pages 471-492.
    15. Son, Hyun Hwa, 2004. "A note on pro-poor growth," Economics Letters, Elsevier, vol. 82(3), pages 307-314, March.
    16. Giovanni Maria Giorgi & Paola Palmitesta & Corrado Provasi, 2006. "Asymptotic and bootstrap inference for the generalized Gini indices," Metron - International Journal of Statistics, Dipartimento di Statistica, Probabilità e Statistiche Applicate - University of Rome, vol. 0(1), pages 107-124.
    17. Rolf Aaberge, 2000. "Characterizations of Lorenz curves and income distributions," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 17(4), pages 639-653.
    18. Giovanni Maria Giorgi & Michele Crescenzi, 2001. "A proposal of poverty measures based on the Bonferroni inequality index," Metron - International Journal of Statistics, Dipartimento di Statistica, Probabilità e Statistiche Applicate - University of Rome, vol. 0(3-4), pages 3-16.
    19. Ivica Urban & Peter J. Lambert, 2008. "Redistribution, Horizontal Inequity, and Reranking," Public Finance Review, , vol. 36(5), pages 563-587, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mauro Mussini, 2017. "Decomposing Changes in Inequality and Welfare Between EU Regions: The Roles of Population Change, Re-Ranking and Income Growth," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 130(2), pages 455-478, January.
    2. Truong Lam Do & Trung Thanh Nguyen & Ulrike Grote, 2022. "Livestock production and income inequality in rural Vietnam," Empirical Economics, Springer, vol. 62(2), pages 409-438, February.
    3. Luigi Grossi & Mauro Mussini, 2017. "Inequality in Energy Intensity in the EU-28: Evidence from a New Decomposition Method," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Elena Bárcena‐Martin & Jacques Silber & Yuan Zhang, 2024. "Measures of Relative and Absolute Convergence and Pro‐poor Growth with an Illustration based on China (2010–2018)," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 32(2), pages 1-41, March.
    2. Mussini, Mauro, 2013. "On decomposing inequality and poverty changes over time: A multi-dimensional decomposition," Economic Modelling, Elsevier, vol. 33(C), pages 8-18.
    3. Vito Peragine & Flaviana Palmisano & Paolo Brunori, 2014. "Economic Growth and Equality of Opportunity," The World Bank Economic Review, World Bank, vol. 28(2), pages 247-281.
    4. Shatakshee Dhongde & Jacques Silber, 2016. "On distributional change, pro-poor growth and convergence," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(3), pages 249-267, September.
    5. Elena Bárcena-Martin & Jacques Silber, 2017. "The Bonferroni index and the measurement of distributional change," METRON, Springer;Sapienza Università di Roma, vol. 75(1), pages 1-16, April.
    6. B. Essama‐Nssah & Peter J. Lambert, 2009. "Measuring Pro‐Poorness: A Unifying Approach With New Results," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(3), pages 752-778, September.
    7. Stephen P. Jenkins & Philippe Van Kerm, 2006. "Trends in income inequality, pro-poor income growth, and income mobility," Oxford Economic Papers, Oxford University Press, vol. 58(3), pages 531-548, July.
    8. Nicolas Herault & Francisco Azpitarte, 2014. "Recent Trends in Income Redistribution in Australia: Can Changes in the Tax-Transfer System Account for the Decline in Redistribution?," Melbourne Institute Working Paper Series wp2014n02, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    9. Herault, Nicolas & Jenkins, Stephen P., 2023. "Redistribution, horizontal inequity, and reranking: direct taxation in the UK, 1977–2020," LSE Research Online Documents on Economics 120996, London School of Economics and Political Science, LSE Library.
    10. Nolan, Matt, 2018. "Horizontal and Vertical Equity in the New Zealand Tax-Transfer System: 1988-2013," Working Paper Series 20838, Victoria University of Wellington, Chair in Public Finance.
    11. Rolf Aaberge & Magne Mogstad, 2015. "Inequality in current and lifetime income," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 44(2), pages 217-230, February.
    12. Flaviana Palmisano & Vito Peragine, 2015. "The Distributional Incidence of Growth: A Social Welfare Approach," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(3), pages 440-464, September.
    13. Satya R. Chakravarty & Palash Sarkar, 2023. "New perspectives on the Gini and Bonferroni indices of inequality," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 60(1), pages 47-64, January.
    14. Mariateresa Ciommi & Chiara Gigliarano & Giovanni Maria Giorgi, 2019. "Bonferroni And De Vergottini Are Back: New Subgroup Decompositions And Bipolarization Measures," Working Papers 439, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    15. Van Kerm, Philippe, 2006. "Comparisons of income mobility profiles," ISER Working Paper Series 2006-36, Institute for Social and Economic Research.
    16. Edwin Fourrier-Nicolaï & Michel Lubrano, 2021. "Bayesian Inference for Parametric Growth Incidence Curves," Research on Economic Inequality, in: Research on Economic Inequality: Poverty, Inequality and Shocks, volume 29, pages 31-55, Emerald Group Publishing Limited.
    17. Markus Jäntti & Stephen P. Jenkins, 2013. "Income Mobility," SOEPpapers on Multidisciplinary Panel Data Research 607, DIW Berlin, The German Socio-Economic Panel (SOEP).
    18. Flaviana Palmisano, 2012. "The distributional incidence of growth: a non-anonymous and rank dependent approach," SERIES 0039, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Jul 2012.
    19. Elena Bárcena-Martin & Jacques Silber, 2013. "On the generalization and decomposition of the Bonferroni index," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 41(4), pages 763-787, October.
    20. Tomasz Panek, 2022. "Subjective Well-Being In European Union Countries," Working Papers 80, Institute of Statistics and Demography, Warsaw School of Economics.

    More about this item

    Keywords

    Inequality trend; Zenga’s index; Decomposition ; Reranking; Income growth; D31; D63; C40;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:empeco:v:47:y:2014:i:2:p:619-637. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.