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Decomposition of Gini coefficients by income factors: a new approach and application

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  • Shujie Yao

Abstract

When total income consists of a number of factors, the Gini coefficient measuring income inequality can be decomposed into factor components. Some traditional decomposition methods rely on calculating the covariances between incomes and their ranks. Such methods have obvious limitations in empirical studies. This paper develops a simple decomposition approach applicable for any type of data with an example to demonstrate how income inequality in rural China in 1992 can be decomposed into agricultural and non-agricultural components.

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  • Shujie Yao, 1997. "Decomposition of Gini coefficients by income factors: a new approach and application," Applied Economics Letters, Taylor & Francis Journals, vol. 4(1), pages 27-31.
    • Handle: RePEc:taf:apeclt:v:4:y:1997:i:1:p:27-31
    DOI: 10.1080/758521827
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    1. Lambert, Peter J & Aronson, J Richard, 1993. "Inequality Decomposition Analysis and the Gini Coefficient Revisited," Economic Journal, Royal Economic Society, vol. 103(420), pages 1221-1227, September.
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    3. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-156, February.
    4. Graham Pyatt & Chau-nan Chen & John Fei, 1980. "The Distribution of Income by Factor Components," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(3), pages 451-473.
    5. Yao, S. & Liu, J., 1995. "Uneven Development of Non-Farm Entreprises and Regional Income Inequality in Rural China," Papers 50, Portsmouth University - Department of Economics.
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    Cited by:

    1. Jiandong Chen & Dai Dai & Ming Pu & Wenxuan Hou & Qiaobin Feng, 2010. "The trend of the Gini coefficient of China," Global Development Institute Working Paper Series 10910, GDI, The University of Manchester.
    2. Harun M. Kiruki & Emma H. Zanden & Patrick Kariuki & Peter H. Verburg, 2020. "The contribution of charcoal production to rural livelihoods in a semi-arid area in Kenya," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 22(7), pages 6931-6960, October.
    3. Paul Mosley & Sanzidur Rahman, 1999. "Impact of technological change on income distribution and poverty in Bangladesh agriculture: an empirical analysis," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(7), pages 935-955.
    4. Ross Guest & Robyn Swift, 2008. "Fertility, income inequality, and labour productivity," Oxford Economic Papers, Oxford University Press, vol. 60(4), pages 597-618, October.
    5. Reddy, S. R. C. & Chakravarty, S. P., 1999. "Forest Dependence and Income Distribution in a Subsistence Economy: Evidence from India," World Development, Elsevier, vol. 27(7), pages 1141-1149, July.
    6. Jr-Tsung Huang & Chun-Chien Kuo & An-Pang Kao, 2003. "The Inequality of Regional Economic Development in China between 1991 and 2001," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 1(3), pages 273-285.

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