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The BIP Trilogy (bipolarization, inequality and polarization): One saga but three different stories

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  • Deutsch, Joseph
  • Fusco, Alessio
  • Silber, Jacques

Abstract

Inequality, bi-polarization and polarization are related but distinct concepts aiming at analysing the income distribution. This paper first recalls the main differences between these three notions of inequality, bipolarization and polarization and then suggests using the so-called Shapley decomposition to show that the various income sources have a different impact on these three types of indicators. Our empirical investigation, based on 2008 data for Luxembourg, shows in fact that, in the case of the so-called zero income Shapley decomposition, inequality in Luxembourg is strongly related to income from capital while bi-polarization is mainly due to the distribution of income from work and polarization to that of the income from work and transfers.

Suggested Citation

  • Deutsch, Joseph & Fusco, Alessio & Silber, Jacques, 2013. "The BIP Trilogy (bipolarization, inequality and polarization): One saga but three different stories," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 7, pages 1-33.
    • Handle: RePEc:zbw:ifweej:201322
    DOI: 10.5018/economics-ejournal.ja.2013-22
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    Cited by:

    1. Marco Ranaldi, 2022. "Income Composition Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 139-160, March.
    2. Mussini Mauro, 2018. "On Measuring Polarization For Ordinal Data: An Approach Based On The Decomposition Of The Leti Index," Statistics in Transition New Series, Statistics Poland, vol. 19(2), pages 277-296, June.
    3. Tanzhe Tang & Amineh Ghorbani & Flaminio Squazzoni & Caspar G. Chorus, 2022. "Together alone: a group-based polarization measurement," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(5), pages 3587-3619, October.
    4. Clementi, Fabio & Molini, Vasco & Schettino, Francesco, 2018. "All that Glitters is not Gold: Polarization Amid Poverty Reduction in Ghana," World Development, Elsevier, vol. 102(C), pages 275-291.
    5. Iryna Kyzyma & Alessio Fusco & Philippe Van Kerm, 2022. "Distributional Change: Assessing the Contribution of Household Income Sources," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(1), pages 158-184, February.
    6. Mauro Mussini, 2016. "On Measuring Income Polarization: An Approach Based On Regression Trees," Statistics in Transition New Series, Polish Statistical Association, vol. 17(2), pages 221-236, June.
    7. Mussini Mauro, 2016. "On Measuring Income Polarization: An Approach Based on Regression Trees," Statistics in Transition New Series, Statistics Poland, vol. 17(2), pages 221-236, June.
    8. Mauro Mussini, 2016. "On Measuring Income Polarization: An Approach Based On Regression Trees," Statistics in Transition new series, Główny Urząd Statystyczny (Polska), vol. 17(2), pages 221-236, June.
    9. Mauro Mussini, 2018. "On Measuring Polarization For Ordinal Data: An Approach Based On The Decomposition Of The Leti Index," Statistics in Transition New Series, Polish Statistical Association, vol. 19(2), pages 277-296, June.
    10. Marco Ranaldi, 2016. "On the Measurement of Functional Income Distribution," Documents de travail du Centre d'Economie de la Sorbonne 16051rrr, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne, revised Oct 2018.
    11. Alessio Fusco & Jacques Silber, 2014. "On social polarization and ordinal variables: the case of self-assessed health," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(8), pages 841-851, November.
    12. Marco Ranaldi, 2016. "On the Measurement of Functional Income Distribution," Documents de travail du Centre d'Economie de la Sorbonne 16051rr, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne, revised Feb 2018.
    13. Oriol Carbonell-Nicolau & Humberto Llavador, 2021. "Inequality, Bipolarization, and Tax Progressivity," American Economic Journal: Microeconomics, American Economic Association, vol. 13(4), pages 492-513, November.
    14. Rhea Ravenna Sohst & Alessio Fusco & Philippe Van Kerm, 2024. "Foreign-born households’ contribution to inequality and polarization in European income distributions," LISER Working Paper Series 2024-06, Luxembourg Institute of Socio-Economic Research (LISER).
    15. Wang, Jinxian & Caminada, Koen & Goudswaard, Kees & Wang, Chen, 2015. "Decomposing income polarization and tax-benefit changes across 31 European countries and Europe wide, 2004-2012," MPRA Paper 66155, University Library of Munich, Germany.
    16. Cantone, Giulio Giacomo & Tomaselli, Venera, 2023. "Quasi-experimental network-based design for semantic analysis of small clusters of bi-polar online reviews," SocArXiv v7u3h, Center for Open Science.
    17. Wang, Chen & Wan, Guanghua, 2015. "Income polarization in China: Trends and changes," China Economic Review, Elsevier, vol. 36(C), pages 58-72.
    18. Marco Ranaldi, 2018. "On the Measurement of Functional Income Distribution," Post-Print halshs-01379229, HAL.

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    More about this item

    Keywords

    bi-polarization; income sources; inequality; Luxembourg; polarization; Shapley decomposition procedure;
    All these keywords.

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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