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A further step to understand income inequality in Chile: A decomposition using three-stages nested Theil index decomposition method

Author

Listed:
  • Dusan Paredes

    (IDEAR - Department of Economics, Universidad Católica del Norte - Chile)

  • Victor Iturra

    (IDEAR - Department of Economics, Universidad Católica del Norte - Chile)

  • Marcelo Lufin

    (IDEAR - Department of Economics, Universidad Católica del Norte - Chile)

Abstract

The previous literature identifies the high and persistent income inequality of Chile, but the geography of this inequality is still unexplored. To evaluate this dimension, we propose a three-stage decomposition of the Theil index at regional, province and county level. Our decomposition indicates that between 1992 and 2009, 21% of the inequality is attributable to these spatial scales. Inside of them, the highest inequality exists between counties and between regions, although they follow different patterns. The inequality between-counties fell from 65% to 53%. Oppositely, inequality between regions was 21% in 1992, and grew to 35% in 2009.

Suggested Citation

  • Dusan Paredes & Victor Iturra & Marcelo Lufin, 2012. "A further step to understand income inequality in Chile: A decomposition using three-stages nested Theil index decomposition method," Documentos de Trabajo en Economia y Ciencia Regional 25, Universidad Catolica del Norte, Chile, Department of Economics, revised Aug 2012.
    • Handle: RePEc:cat:dtecon:dt201211
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    References listed on IDEAS

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    10. X. Zhang & R. Kanbur, 2001. "What Difference Do Polarisation Measures Make? An Application to China," Journal of Development Studies, Taylor & Francis Journals, vol. 37(3), pages 85-98.
    11. Dusan Paredes Araya & Victor Iturra Rivera, 2013. "Substitution bias and the construction of a spatial cost of living index," Papers in Regional Science, Wiley Blackwell, vol. 92(1), pages 103-117, March.
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    14. Sergio J. Rey, 2001. "Spatial Analysis of Regional Income Inequality," Urban/Regional 0110002, University Library of Munich, Germany.
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    Cited by:

    1. Dusan Paredes, 2015. "Can Neg Explain the Spatial Distribution of Wages of Chile?," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 106(1), pages 65-77, February.
    2. Kamila Tureckova, 2015. "Income Inequality By Method Of Non-Weighted Average Absolute Deviation: Case Study Of Central And Eastern European Countries*," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 10(4), pages 99-110, December.
    3. David Castells-Quintana & Raul Ramos & Vicente Royuela, 2015. "Income inequality in European Regions: Recent trends and determinants," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 35(2), pages 123-146, October.

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    More about this item

    Keywords

    Three stage nested Theil index; spatial income inequality;

    JEL classification:

    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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