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On the Decomposition of Economic Inequality: A Methodology and an Application to Tunisia

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  • Hatem Jemmali

    (University of Tunis El-Manar)

  • Mohamed Amara

Abstract

The paper provides a detailed examination of the structure and dynamics of economic inequality in Tunisia by using harmonized micro-data from national household budget surveys for 2005 and 2010. It assesses the levels and drivers of urban-rural and littoral-inland disparities employing the Firpo et al. (2009) method. The main findings reveal that, in contrast to the decrease in within-region inequality, the between-region inequality has increased slightly over the considered period. Disparities in households’ endowments such as human capital, demographic composition, and regional location appear as the main sources of the urban–rural welfare gap, while the coastal-inland is driven mainly by the differences in returns to human capital. Giving these results, any policy intervention aiming at mitigating the impact of economic inequality among regions must consider these key factors to give more chances to next generations to spring out of the poverty and inequality lived by their parents.

Suggested Citation

  • Hatem Jemmali & Mohamed Amara, 2017. "On the Decomposition of Economic Inequality: A Methodology and an Application to Tunisia," Working Papers 1096, Economic Research Forum, revised 05 2017.
    • Handle: RePEc:erg:wpaper:1096
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    References listed on IDEAS

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    1. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
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    4. Fortin, Nicole & Lemieux, Thomas & Firpo, Sergio, 2011. "Decomposition Methods in Economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 1, pages 1-102, Elsevier.
    5. Sergio Firpo & Nicole M. Fortin & Thomas Lemieux, 2009. "Unconditional Quantile Regressions," Econometrica, Econometric Society, vol. 77(3), pages 953-973, May.
    6. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
    7. Hassine, Nadia Belhaj, 2015. "Economic Inequality in the Arab Region," World Development, Elsevier, vol. 66(C), pages 532-556.
    8. Adams, Richard Jr. & Page, John, 2003. "Poverty, Inequality and Growth in Selected Middle East and North Africa Countries, 1980-2000," World Development, Elsevier, vol. 31(12), pages 2027-2048, December.
    9. World Bank, 2014. "The Unfinished Revolution : Bringing Opportunity, Good Jobs and Greater Wealth to All Tunisians [La Révolution Inachevée : Créer des opportunités, des emplois de qualité et de la richesse pour tous," World Bank Publications - Reports 20267, The World Bank Group.
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    Cited by:

    1. Sawssen Nafti & Fatma Mrad & Ahlem Boubker, 2021. "Tunisia Post Revolution: Confronting Social problems, Economic Challenges and Regional Disparity," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 13(9), pages 127-127, August.
    2. Racha Ramadan & Vladimir Hlasny & Vito Intini, 2018. "Inter‐Group Expenditure Gaps In The Arab Region And Their Determinants: Application To Egypt, Jordan, Palestine And Tunisia," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(s1), pages 145-188, October.

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