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Book part
Publication date: 30 December 2013

Gustav Kjellsson and Ulf-G. Gerdtham

What change in the distribution of a population’s health preserves the level of inequality? The answer to this analogous question in the context of income inequality lies…

Abstract

What change in the distribution of a population’s health preserves the level of inequality? The answer to this analogous question in the context of income inequality lies somewhere between a uniform and a proportional change. These polar positions represent the absolute and relative inequality equivalence criterion (IEC), respectively. A bounded health variable may be presented in terms of both health attainments and shortfalls. As a distributional change cannot simultaneously be proportional to attainments and to shortfalls, relative inequality measures may rank populations differently from the two perspectives. In contrast to the literature that stresses the importance of measuring inequality in attainments and shortfalls consistently using an absolute IEC, this chapter formalizes a new compromise concept for a bounded variable by explicitly considering the two relative IECs, defined with respect to attainments and shortfalls, to represent the polar cases of defensible positions.

We use a surplus-sharing approach to provide new insights on commonly used inequality indices by evaluating the underpinning IECs in terms of how infinitesimal surpluses of health must be successively distributed to preserve the level of inequality. We derive a one-parameter IEC that, unlike those implicit in commonly used indices, assigns constant weights to the polar cases independent of the health distribution.

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Health and Inequality
Type: Book
ISBN: 978-1-78190-553-1

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Book part
Publication date: 15 December 2004

Buhong Zheng

This paper examines the notion of intermediate inequality and its measurement. Specifically, we investigate whether the intermediateness of an intermediate measure can be…

Abstract

This paper examines the notion of intermediate inequality and its measurement. Specifically, we investigate whether the intermediateness of an intermediate measure can be preserved through repeated (affine) inequality-neutral income transformation. For all existent intermediate measures of inequality, we show that the intermediateness cannot be preserved through the transformation; each intermediate measure tends to either a relative measure or an absolute measure. This observation is then generalized to the class of unit-consistent inequality measures. An inequality measure is unit-consistent if inequality rankings by the measure are not affected by the measuring units in which incomes are expressed. We show that the unit-consistent class of intermediate measure of inequality consists of generalizations of an existent intermediate measure and, hence, the intermediateness also cannot be retained in the limit through transformations.

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Studies on Economic Well-Being: Essays in the Honor of John P. Formby
Type: Book
ISBN: 978-0-76231-136-1

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Book part
Publication date: 26 November 2020

Marek Kosny, Jacques Silber and Gaston Yalonetzky

We propose a framework for the measurement of income mobility over several time periods, based on the notion that multi-period mobility amounts to measuring the degree of…

Abstract

We propose a framework for the measurement of income mobility over several time periods, based on the notion that multi-period mobility amounts to measuring the degree of association between the individuals and the time periods. More precisely we compare the actual income share of individuals at a given time in the total income of all individuals over the whole period analyzed, with their “expected” share, assumed to be equal to the hypothetical income share in the total income of society over the whole accounting period that an individual would have had at a given time, had there been complete independence between the individuals and the time periods. We then show that an appropriate way of consistently measuring multi-period mobility should focus on the absolute rather than the traditional (relative) Lorenz curve and that the relevant variable to be accumulated should be the difference between the “a priori” and “a posteriori” shares previously defined. Moving from an ordinal to a cardinal approach to measuring multi-period mobility, we then propose classes of mobility indices based on absolute inequality indices. We illustrate our approach with an empirical application using the EU-SILC rotating panel dataset. Our empirical analysis seems to vindicate our approach because it clearly shows that income mobility was higher in the new EU countries (those that joined the EU in 2004 and later). We also observe that income mobility after 2008 was higher in three countries that were particularly affected by the financial crisis: Greece, Portugal, and Spain.

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Inequality, Redistribution and Mobility
Type: Book
ISBN: 978-1-80043-040-2

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Book part
Publication date: 15 October 2008

Coral del Río and Olga Alonso-Villar

The purpose of this paper is to analyze the advantages and disadvantages of several intermediate inequality measures, paying special attention to the unit-consistency…

Abstract

The purpose of this paper is to analyze the advantages and disadvantages of several intermediate inequality measures, paying special attention to the unit-consistency axiom proposed by Zheng (2007). First, we demonstrate why one of the most referenced intermediate indices, proposed by Bossert and Pfingsten (1990), is not unit-consistent. Second, we explain why the invariance criterion proposed by Del Río and Ruiz-Castillo (2000), recently generalized by Del Río and Alonso-Villar (2008), leads instead to inequality measures that are unaffected by the currency unit. Third, we show that the intermediate measures proposed by Kolm (1976) may also violate unit-consistency. Finally, we reflect on the concept of intermediateness behind the above notions together with that proposed by Krtscha (1994). Special attention is paid to the geometric interpretations of our results.

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Inequality and Opportunity: Papers from the Second ECINEQ Society Meeting
Type: Book
ISBN: 978-1-84855-135-0

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Book part
Publication date: 10 October 2017

Suman Seth and Sabina Alkire

A number of multidimensional poverty measures that respect the ordinal nature of dimensions have recently been proposed within the counting approach framework. Besides…

Abstract

A number of multidimensional poverty measures that respect the ordinal nature of dimensions have recently been proposed within the counting approach framework. Besides ensuring a reduction in poverty, however, it is important to monitor distributional changes to ensure that poverty reduction has been inclusive in reaching the poorest. Distributional issues are typically captured by adjusting a poverty measure to be sensitive to inequality among the poor. This approach, however, has certain practical and conceptual limitations. It conflicts, for example, with some policy-relevant measurement features, such as the ability to decompose a measure into dimensions post-identification and does not create an appropriate framework for assessing disparity in poverty across population subgroups. In this chapter, we propose and justify the use of a separate decomposable inequality measure – a positive multiple of “variance” – to capture the distribution of deprivations among the poor and to assess disparity in poverty across population subgroups. We demonstrate the applicability of our approach through two contrasting inter-temporal illustrations using Demographic Health Survey data sets for Haiti and India.

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Book part
Publication date: 6 July 2007

Ian Preston

This paper discusses inequality orderings based explicitly on closing up of income gaps, demonstrating the links between these and other orderings, the classes of…

Abstract

This paper discusses inequality orderings based explicitly on closing up of income gaps, demonstrating the links between these and other orderings, the classes of functions preserving the orderings and applications showing their usefulness in comparison of economic policies.

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Equity
Type: Book
ISBN: 978-0-7623-1450-8

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Article
Publication date: 6 March 2020

Willian Boschetti Adamczyk and Adelar Fochezatto

This article aims to measure inequality of income and opportunities at the national and state levels in Brazil, highlighting their acceptable and unacceptable components.

Abstract

Purpose

This article aims to measure inequality of income and opportunities at the national and state levels in Brazil, highlighting their acceptable and unacceptable components.

Design/methodology/approach

To this end, a lower-bound estimate of income inequality (MLD) and inequality of opportunity (IOp) was developed using data from the National Household Sample Survey between 2001 and 2014.

Findings

It shows that the disparity of income measured by the MLD decreased 26.7 percent, while IOp measured by the IOp decreased 25.6 percent during that period. The decline in total inequality can be attributed to a 48.5 percent decrease of its unfair component and 51.5 percent decrease of its fair component. The average income of the most disadvantaged group (non-white women working in the informal sector) is shown to be only 29.5 percent of the income of the most advantaged group (formally employed white men). The groups at the greatest disadvantage were most benefited by the increase in income.

Originality/value

Beyond comparisons among countries, analysis at the subnational level make it possible to identify how the process that generates inequality acts in each state, revealing patterns undetected in the aggregate analysis. Its decomposition generates two products that are useful to policy-makers. The first is a base estimate of the degree of IOp present in society, which may be expressed as an indicator of the degree of IOp. The second examines the portion of total inequality attributable to IOp.

Details

Journal of Economic Studies, vol. 47 no. 3
Type: Research Article
ISSN: 0144-3585

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Book part
Publication date: 30 September 2014

Shiyi Chen and Buhong Zheng

This paper applies a recently developed method of ranking socioeconomic inequality in health to ranking U.S. happiness from 1994 to 2012 using the GSS data. We also…

Abstract

This paper applies a recently developed method of ranking socioeconomic inequality in health to ranking U.S. happiness from 1994 to 2012 using the GSS data. We also compare happiness between subgroups as decomposed by gender, race, and age. We establish and test a monotone condition of happiness – a richer person is likely to be happier. Under the monotone condition, standard tools of welfare and inequality ranking can be applied straightforwardly.

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Economic Well-Being and Inequality: Papers from the Fifth ECINEQ Meeting
Type: Book
ISBN: 978-1-78350-556-2

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Book part
Publication date: 26 October 2011

Gustavo A. Marrero and Juan G. Rodríguez

Purpose – Our ultimate goal is to characterize three methodological issues. First, compare the relative performance of alternative estimation methods for long time series…

Abstract

Purpose – Our ultimate goal is to characterize three methodological issues. First, compare the relative performance of alternative estimation methods for long time series, second, estimate the degree of correlation between effort and circumstances, and, third, decompose total inequality into inequality of opportunity and inequality of effort according to an ideal tree.

Methodology – We estimate parametrically and nonparametrically the ex-ante inequality of opportunity in the United States between 1969 and 2007. The degree of correlation between effort and circumstances is computed following the proposal in Björklund et al. (2011). In addition, we decompose total inequality based on an ideal tree with three levels of disaggregation by applying the natural decomposition of the squared coefficient of variation and the Nested Shapley value.

Findings – We find significant differences between the nonparametric and parametric approaches. In particular, our results reveal that considering cross-effects between circumstances may be relevant. Moreover, the degree of correlation between effort and circumstances which has significantly increased over the period 1969 and 2007 in the United States, explains between 5% and 20% of total IO. In addition, race is the main circumstance during the 1970s and 1980s, accounting for more than 50% of the direct IO, while parental education take the lead in the last two decades.

Originality – We modify the parametric specification by considering cross-effects between circumstances. We estimate the degree of correlation between effort and circumstances for long time series. We decompose total inequality according to a three-level hierarchical model.

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Inequality of Opportunity: Theory and Measurement
Type: Book
ISBN: 978-1-78052-035-3

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Book part
Publication date: 15 October 2008

Frank Cowell and Udo Ebert

Our purpose is to examine the “envy” within the context of income inequality measurement.We use a simple axiomatic structure that takes into account “envy” in the income…

Abstract

Our purpose is to examine the “envy” within the context of income inequality measurement.

We use a simple axiomatic structure that takes into account “envy” in the income distribution. The concept of envy incorporated here concerns the distance of each person's income from his or her immediately richer neighbour.

We derive two classes of inequality indices – absolute and relative. The envy concept is shown to be similar to justice concepts based on income relativities.

This is the first time a complete characterisation has been provided for envy-related inequality.

Details

Inequality and Opportunity: Papers from the Second ECINEQ Society Meeting
Type: Book
ISBN: 978-1-84855-135-0

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