IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp1219.html
   My bibliography  Save this paper

Inequalities and Their Measurement

Author

Listed:
  • Heshmati, Almas

    (Jönköping University)

Abstract

This paper is a review of the recent advances in the measurement of inequality. Inequality can have several dimensions. Economists are mostly concerned with the income and consumption dimensions of inequality. Several inequality indices including the most widely used index of inequality namely the Gini coefficient is discussed. Non-income inequality includes inequality in skills, education, opportunities, happiness, health, wealth, and others. The direct and indirect effects of inequality in non-income factors on earnings and health are discussed. Results from review of the literature suggest relationship between inequality in income and non-income dimensions. This indicates that one should account for the interrelationship between the different dimensions in the measurement and analyses of inequalities.

Suggested Citation

  • Heshmati, Almas, 2004. "Inequalities and Their Measurement," IZA Discussion Papers 1219, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1219
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp1219.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ryu, Hang K. & Slottje, Daniel J., 1996. "Two flexible functional form approaches for approximating the Lorenz curve," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 251-274.
    2. José De Gregorio & Jong–Wha Lee, 2002. "Education and Income Inequality: New Evidence From Cross‐Country Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(3), pages 395-416, September.
    3. Angus Deaton, 2003. "Health, Inequality, and Economic Development," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 113-158, March.
    4. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-659, May.
    5. Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, vol. 57(2), pages 259-287.
    6. Dan Devroye & Richard B. Freeman, 2001. "Does Inequality in Skills Explain Inequality in Earnings Across Advanced Countries?," NBER Working Papers 8140, National Bureau of Economic Research, Inc.
    7. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September.
    8. repec:pri:cheawb:deaton_lubotsky_mortality_inequality_paper is not listed on IDEAS
    9. Alesina, Alberto & Di Tella, Rafael & MacCulloch, Robert, 2004. "Inequality and happiness: are Europeans and Americans different?," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2009-2042, August.
    10. Philippe Aghion & Simon Commander, 1999. "On the dynamics of inequality in the transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 275-298, July.
    11. Chotikapanich, Duangkamon & Griffiths, William E, 2002. "Estimating Lorenz Curves Using a Dirichlet Distribution," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(2), pages 290-295, April.
    12. Cowell, F.A., 2000. "Measurement of inequality," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 2, pages 87-166, Elsevier.
    13. Giovanni Andrea Cornia & Sampsa Kiiski, 2001. "Trends in Income Distribution in the Post-World War II Period: Evidence and Interpretation," WIDER Working Paper Series DP2001-89, World Institute for Development Economic Research (UNU-WIDER).
    14. repec:pri:rpdevs:deaton_lubotsky_mortality_inequality_paper is not listed on IDEAS
    15. McDonald, James B. & Xu, Yexiao J., 1995. "A generalization of the beta distribution with applications," Journal of Econometrics, Elsevier, vol. 69(2), pages 427-428, October.
    16. van Doorslaer, Eddy & Wagstaff, Adam & Bleichrodt, Han & Calonge, Samuel & Gerdtham, Ulf-G. & Gerfin, Michael & Geurts, Jose & Gross, Lorna & Hakkinen, Unto & Leu, Robert E., 1997. "Income-related inequalities in health: some international comparisons," Journal of Health Economics, Elsevier, vol. 16(1), pages 93-112, February.
    17. Deaton, Angus & Lubotsky, Darren, 2003. "Mortality, inequality and race in American cities and states," Social Science & Medicine, Elsevier, vol. 56(6), pages 1139-1153, March.
    18. Amparo Castello & Rafael Domenech, 2002. "Human Capital Inequality and Economic Growth: Some New Evidence," Economic Journal, Royal Economic Society, vol. 112(478), pages 187-200, March.
    19. Jennifer M. Mellor & Jeffrey D. Milyo, 2001. "Income inequality and health," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 20(1), pages 151-155.
    20. Gerdtham, Ulf-G. & Johannesson, Magnus, 2000. "Income-related inequality in life-years and quality-adjusted life-years," Journal of Health Economics, Elsevier, vol. 19(6), pages 1007-1026, November.
    21. Singh, S K & Maddala, G S, 1976. "A Function for Size Distribution of Incomes," Econometrica, Econometric Society, vol. 44(5), pages 963-970, September.
    22. 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.
    23. Pradhan, Menno & Sahn, David E. & Younger, Stephen D., 2003. "Decomposing world health inequality," Journal of Health Economics, Elsevier, vol. 22(2), pages 271-293, March.
    24. Yitzhaki, Shlomo, 1983. "On an Extension of the Gini Inequality Index," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(3), pages 617-628, October.
    25. repec:pri:cheawb:deaton_lubotsky_mortality_inequality_paper.pdf is not listed on IDEAS
    26. Davies, James B. & Shorrocks, Anthony F., 2000. "The distribution of wealth," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 11, pages 605-675, Elsevier.
    27. Lerman, Robert I. & Yitzhaki, Shlomo, 1989. "Improving the accuracy of estimates of Gini coefficients," Journal of Econometrics, Elsevier, vol. 42(1), pages 43-47, September.
    28. Chuanc, Hwei-Lin & Huang, Wei-Chiao, 1997. "Economic and social correlates of regional suicide rates: A pooled cross-section and time-series analysis," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 26(3), pages 277-289.
    29. Ogwang, Tomson & Rao, U. L. Gouranga, 2000. "Hybrid models of the Lorenz curve," Economics Letters, Elsevier, vol. 69(1), pages 39-44, October.
    30. Carol Graham, 2002. "Mobility, Opportunity and Vulnerability: The Dynamics of Poverty and Inequality in a Global Economy," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 3(1), pages 57-94.
    31. Eicher, Theo S. & Garcia-Penalosa, Cecilia, 2001. "Inequality and growth: the dual role of human capital in development," Journal of Development Economics, Elsevier, vol. 66(1), pages 173-197, October.
    32. Shorrocks, A F, 1978. "The Measurement of Mobility," Econometrica, Econometric Society, vol. 46(5), pages 1013-1024, September.
    33. Philippe Aghion, 2002. "Schumpeterian Growth Theory and the Dynamics of Income Inequality," Econometrica, Econometric Society, vol. 70(3), pages 855-882, May.
    34. Cowell, Frank A & Victoria-Feser, Maria-Pia, 1996. "Robustness Properties of Inequality Measures," Econometrica, Econometric Society, vol. 64(1), pages 77-101, January.
    35. repec:pri:rpdevs:deaton_lubotsky_mortality_inequality_and_race_in_american_cities_and_stat is not listed on IDEAS
    36. Hartog, Joop & Oosterbeek, Hessel, 1998. "Health, wealth and happiness: why pursue a higher education?," Economics of Education Review, Elsevier, vol. 17(3), pages 245-256, June.
    37. Hasegawa, Hikaru & Kozumi, Hideo, 2003. "Estimation of Lorenz curves: a Bayesian nonparametric approach," Journal of Econometrics, Elsevier, vol. 115(2), pages 277-291, August.
    38. Mervyn A. King, 1980. "An Index of Inequality: With Applications to Horizontal Equity and Social Mobility," NBER Working Papers 0468, National Bureau of Economic Research, Inc.
    39. Pyatt, Graham, 1976. "On the Interpretation and Disaggregation of Gini Coefficients," Economic Journal, Royal Economic Society, vol. 86(342), pages 243-255, June.
    40. Yitzhaki, Shlomo, 1994. "Economic distance and overlapping of distributions," Journal of Econometrics, Elsevier, vol. 61(1), pages 147-159, March.
    41. repec:bla:revinw:v:47:y:2001:i:4:p:541-47 is not listed on IDEAS
    42. Liliana Winkelmann & Rainer Winkelmann, 1998. "Why Are the Unemployed So Unhappy?Evidence from Panel Data," Economica, London School of Economics and Political Science, vol. 65(257), pages 1-15, February.
    43. Shorrocks, Anthony, 1978. "Income inequality and income mobility," Journal of Economic Theory, Elsevier, vol. 19(2), pages 376-393, December.
    44. Cameron, Lisa A., 2000. "Poverty and inequality in Java: examining the impact of the changing age, educational and industrial structure," Journal of Development Economics, Elsevier, vol. 62(1), pages 149-180, June.
    45. Cowell, Frank A. & Victoria-Feser, Maria-Pia, 1996. "Poverty measurement with contaminated data: A robust approach," European Economic Review, Elsevier, vol. 40(9), pages 1761-1771, December.
    46. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    47. Yew-Kwang Ng, 1996. "Happiness surveys: Some comparability issues and an exploratory survey based on just perceivable increments," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 38(1), pages 1-27, May.
    48. Duangkamon Chotikapanich & William Griffiths, 2001. "On Calculation of the Extended Gini Coefficient," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(4), pages 541-547, December.
    49. repec:pri:rpdevs:deaton_lubotsky_mortality_inequality_paper.pdf is not listed on IDEAS
    50. Kakwani, Nanak & Wagstaff, Adam & van Doorslaer, Eddy, 1997. "Socioeconomic inequalities in health: Measurement, computation, and statistical inference," Journal of Econometrics, Elsevier, vol. 77(1), pages 87-103, March.
    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. Andrés Rodríguez‐Pose & Vassilis Tselios, 2009. "Education And Income Inequality In The Regions Of The European Union," Journal of Regional Science, Wiley Blackwell, vol. 49(3), pages 411-437, August.
    2. D'ANGELO Emanuela & LILLA Marco, 2007. "Is there more than one linkage between Social Network and Inequality?," IRISS Working Paper Series 2007-12, IRISS at CEPS/INSTEAD.
    3. Kim, Yunhee & Lee, Jeong-Dong & Heshmati, Almas, 2008. "Analysis of Pay Inequality and its Impacts on Growth and Performance in the Korean Manufacturing Industry," IZA Discussion Papers 3774, Institute of Labor Economics (IZA).
    4. Eleni Karagiannaki, 2017. "The empirical relationship between income poverty and income inequality in rich and middle income countries," CASE Papers /206, Centre for Analysis of Social Exclusion, LSE.
    5. Richard Bernknopf & Paul Amos, 2014. "Measuring earthquake risk concentration for hazard mitigation," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 74(3), pages 2163-2192, December.
    6. Salvatore Morelli & Timothy Smeeding & Jeffrey Thompson, 2014. "Post-1970 Trends in Within-Country Inequality and Poverty: Rich and Middle Income Countries," CSEF Working Papers 356, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    7. Heshmati, Almas, 2004. "A Review of Decomposition of Income Inequality," IZA Discussion Papers 1221, Institute of Labor Economics (IZA).
    8. Sergey A. Belozyorov & Olena V. Sokolovska, 2018. "Personal income taxation and income inequality in Asia-Pacific: a cross-country analysis," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 4(3), pages 236-249.
    9. Heshmati, Almas, 2004. "Data Issues and Databases Used in Analysis of Growth, Poverty and Economic Inequality," IZA Discussion Papers 1263, Institute of Labor Economics (IZA).
    10. Fiedler, Ingo & Kairouz, Sylvia & Costes, Jean-Michel & Weißmüller, Kristina S., 2019. "Gambling spending and its concentration on problem gamblers," Journal of Business Research, Elsevier, vol. 98(C), pages 82-91.
    11. Heshmati, Almas, 2004. "The World Distribution of Income and Income Inequality," IZA Discussion Papers 1267, Institute of Labor Economics (IZA).
    12. Karagiannaki, Eleni, 2017. "The empirical relationship between income poverty and income inequality in rich and middle income countries," LSE Research Online Documents on Economics 86917, London School of Economics and Political Science, LSE Library.
    13. Odozi, John C., 2012. "Socio economic gender inequality in Nigeria: A review of theory and measurements," MPRA Paper 41826, University Library of Munich, Germany.

    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. Heshmati, Almas, 2004. "A Review of Decomposition of Income Inequality," IZA Discussion Papers 1221, Institute of Labor Economics (IZA).
    2. Heshmati, Almas, 2004. "The World Distribution of Income and Income Inequality," IZA Discussion Papers 1267, Institute of Labor Economics (IZA).
    3. C. Schluter & D. Van De Gaer, 2003. "Mobility as distributional difference," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/182, Ghent University, Faculty of Economics and Business Administration.
    4. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
    5. P. Jenkins, Stephen & Jäntti, Markus, 2013. "Income mobility," ISER Working Paper Series 2013-23, Institute for Social and Economic Research.
    6. Peter Gottschalk & Enrico Spolaore, 2002. "On the Evaluation of Economic Mobility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(1), pages 191-208.
    7. Ada Ferrer-i-Carbonell, 2013. "Happiness economics," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 4(1), pages 35-60, March.
    8. Juncal Cuñado & Fernando Gracia, 2012. "Does Education Affect Happiness? Evidence for Spain," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 108(1), pages 185-196, August.
    9. Samina Sabir & Nighat Aziz, 2018. "Impact of Health and Education on Income Inequality: Evidence from Selected Developing Countries," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 10(4), pages 83-102, December.
    10. Frank A. Cowell & Philippe Kerm, 2015. "Wealth Inequality: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 671-710, September.
    11. Gibbons, Stephen & Silva, Olmo, 2011. "School quality, child wellbeing and parents' satisfaction," Economics of Education Review, Elsevier, vol. 30(2), pages 312-331, April.
    12. Almas Heshmati, 2006. "Continental And Sub-Continental Income Inequality," The IUP Journal of Applied Economics, IUP Publications, vol. 0(1), pages 7-52, January.
    13. Frank A Cowell & Christian Schluter, 1998. "Income Mobility: A Robust Approach (published in Income Inequality Measurement: From Theory to Practice, J Silber (ed, Dewenter: Kluver , 1999)," STICERD - Distributional Analysis Research Programme Papers 37, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    14. Genya Kobayashi & Kazuhiko Kakamu, 2019. "Approximate Bayesian computation for Lorenz curves from grouped data," Computational Statistics, Springer, vol. 34(1), pages 253-279, March.
    15. Thomas Markussen & Maria Fibæk & Finn Tarp & Nguyen Do Anh Tuan, 2018. "The Happy Farmer: Self-Employment and Subjective Well-Being in Rural Vietnam," Journal of Happiness Studies, Springer, vol. 19(6), pages 1613-1636, August.
    16. Frank A Cowell & Christian Schluter, 1998. "Measuring Income Mobility with Dirty Data (published in Ethnic and Racial Studies, 22(3), May 1999)," CASE Papers 016, Centre for Analysis of Social Exclusion, LSE.
    17. Maite Blázquez Cuesta & Elena Cottini & Herrarte, A. (Ainhoa), 2012. "GINI DP 39: Socioeconomic Gradient in Health: How Important is Material Deprivation?," GINI Discussion Papers 39, AIAS, Amsterdam Institute for Advanced Labour Studies.
    18. O'Donnell, Gus & Oswald, Andrew J., 2015. "National well-being policy and a weighted approach to human feelings," Ecological Economics, Elsevier, vol. 120(C), pages 59-70.
    19. Juncal Cuñado & Fernando Gracia, 2013. "Environment and Happiness: New Evidence for Spain," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 112(3), pages 549-567, July.
    20. Luis Ayala & Mercedes Sastre, 2004. "Europe vs. the United States: is there a trade-off between mobility and inequality?," Journal of Income Distribution, Ad libros publications inc., vol. 13(1-2), pages 4-4, March-Jun.

    More about this item

    Keywords

    inequality indices; income distribution; income inequality;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • N30 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative

    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:iza:izadps:dp1219. 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: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    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.