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Handbook of Microsimulation Modelling
Type: Book
ISBN: 978-1-78350-570-8

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Article
Publication date: 30 July 2018

Yir-Hueih Luh and Min-Fang Wei

The Old Farmer Pension Program (OFPP) represents Taiwan’s long-standing efforts aiming at improving farm household income and well-being; however, how effective the…

Abstract

Purpose

The Old Farmer Pension Program (OFPP) represents Taiwan’s long-standing efforts aiming at improving farm household income and well-being; however, how effective the pension program is in terms of achieving the policy agenda has remained unclear. The paper aims to discuss this issue.

Design/methodology/approach

Based on data drawn from the Survey of Family Income and Expenditure during 1999–2013, two identification strategies are used to examine the effect of OFPP. First the authors apply the Blinder-Oaxaca decomposition to address the concern if the program reaches the socially/economically disadvantaged farm households. The second identification strategy involves using the static and dynamic decomposition approaches to identify the major factors contributing to farm household income inequality and the redistribution role of the OFPP.

Findings

Results from the Blinder-Oaxaca decomposition indicate that about 60 percent of the income gap can be eliminated if the pension recipients’ socio-economic characteristics are the same as the non-recipient group, suggesting it is the disadvantaged group that receives the old farmer pension. Moreover, the results suggest the significant contributions of household investments in health and human capital as well as diversification toward nonfarm activities, to income inequality among Taiwan’s farm households. Results from the dynamic decomposition suggest that the first-wave adjustment of the OFPP enlarges farm household income inequality, the following two waves of adjustment, however, plays an equalizing role.

Originality/value

This study adds to the literature by providing a methodological refinement promoting the view that it calls for the use of the dynamic (change) decomposition framework to investigate the inequality-enlarging or inequality-equalizing role each income determinant plays.

Details

China Agricultural Economic Review, vol. 11 no. 1
Type: Research Article
ISSN: 1756-137X

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Book part
Publication date: 30 December 2013

Guido Erreygers and Roselinde Kessels

In this chapter we explore different ways to obtain decompositions of rank-dependent indices of socioeconomic inequality of health, such as the Concentration Index. Our…

Abstract

In this chapter we explore different ways to obtain decompositions of rank-dependent indices of socioeconomic inequality of health, such as the Concentration Index. Our focus is on the regression-based type of decomposition. Depending on whether the regression explains the health variable, or the socioeconomic variable, or both, a different decomposition formula is generated. We illustrate the differences using data from the Ethiopia 2011 Demographic and Health Survey (DHS).

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

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Article
Publication date: 18 January 2013

Indunil De Silva

The purpose of this paper is to decompose inequality in Sri Lanka by population subgroups and income sources.

Abstract

Purpose

The purpose of this paper is to decompose inequality in Sri Lanka by population subgroups and income sources.

Design/methodology/approach

The study is based on the latest Sri Lankan Household Income and Expenditure Survey. The study firstly sketches an inequality profile for Sri Lanka and then investigates the principle components of inequality by applying several decomposition techniques. Essentially a decomposable class of inequality measures were computed by considering households characteristics such as geographic location/sector, gender, education and type of employment. Inequality within and between population subgroups/sectors in the distribution of expenditure was done by employing the Theil's entropy index, mean logarithmic deviation, and the half the squared coefficient of variation. Concentration curves and indices were utilized to decompose inequality by expenditure components.

Findings

The empirical findings are broadly encouraging. Decomposition analysis results reveal that in all groups used, the between‐group inequality accounts only for a very small part of the overall inequality. Thus, reducing inequality between the household groups would have only limited effect on reducing the overall inequality. Results confirm the fact that inequality in Sri Lanka was driven by relatively higher levels of expenditure inequalities of those at the top of the expenditure distribution. Decomposition estimates of the Gini index by expenditure sources via Rao's method revealed that the distribution of non‐food expenditure was more asymmetric as compared to food expenditure. Findings in general point to the wisdom of considering the redistribution of economic resources within‐sectors and sub‐groups rather than between‐sectors and sub‐groups if the intention is to cost effectively reduce overall inequalities in Sri Lanka. However, in practice an optimal‐mix of within and between‐group policies would be required in addressing overall inequality.

Originality/value

This is the first study that analyzes the latest Sri Lankan Household Income and Expenditure Survey to decompose inequality by population subgroups and income sources.

Details

Journal of Economic Studies, vol. 40 no. 1
Type: Research Article
ISSN: 0144-3585

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Book part
Publication date: 20 June 2003

Gary S. Fields

This paper devises a new method for using the information contained in income-generating equations to “account for” or “decompose” the level of income inequality in a…

Abstract

This paper devises a new method for using the information contained in income-generating equations to “account for” or “decompose” the level of income inequality in a country and its change over time. In the levels decomposition, the shares attributed to each explanatory factor are independent of the particular inequality measure used. In the change decomposition, methods are presented to break down the contribution of each explanatory factor into a coefficients effect, a correlation effect, and a standard deviation effect. In an application to rising earnings inequality in the United States, it is found that schooling is the single most explanatory variable, only one other variable (occupation) has any appreciable role to play, and all of schooling’s effect was a coefficients effect.

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Worker Well-Being and Public Policy
Type: Book
ISBN: 978-1-84950-213-9

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Book part
Publication date: 28 December 2018

Claudia Sámano-Robles

This chapter examines the impact of education on income inequality in 18 Latin American countries between 2000 and 2010. This period has raised interest in the academic…

Abstract

This chapter examines the impact of education on income inequality in 18 Latin American countries between 2000 and 2010. This period has raised interest in the academic community because inequality has fallen across the region, after several years of consistent high levels. Employing the novel technique proposed by Firpo, Fortin, and Lemieux (2007), the author’s research provides a detailed decomposition of inequality. Three main findings emerge from the author’s results: First, the expansion of education increases inequality in six countries but reduces inequality in four countries. Second, the changes in returns to education are the driving component of the effects of education on inequality. Those countries where education contributes to a fall in inequality are those where the returns to education fell at the top of the income distribution. Third, the rise in the average years of education, considered alone, had an inequality-increasing effect in most of the countries under analysis.

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Inequality, Taxation and Intergenerational Transmission
Type: Book
ISBN: 978-1-78756-458-9

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Article
Publication date: 29 June 2018

Emmanuel O. Nwosu, Obed Ojonta and Anthony Orji

Enhancing household consumption and reducing inequality are among the fundamental goals of many developing countries. The purpose of this study therefore is to…

Abstract

Purpose

Enhancing household consumption and reducing inequality are among the fundamental goals of many developing countries. The purpose of this study therefore is to disaggregate household consumption expenditure into food and non-food and, thus, decompose inequality into within- and between-groups.

Design/methodology/approach

The study adopts generalised entropy (GE) measures. Second, the study uses regression-based inequality decomposition to ascertain the determinants of inequality in food and non-food expenditure using household demographic and socioeconomic characteristics as covariates.

Findings

The results show that non-food expenditure is the major source of inequality in household consumption expenditure in both urban and rural areas with inequality coefficients of above 0.6 compared to about 0.4 for food expenditure. The decompositions also show that within-group inequalities for non-food and food expenditure are, respectively, 0.97 and 0.365 using the Theil index, while between-group inequalities for non-food and food are, respectively, 0.016 and 0.035. Furthermore, the regression-based inequality decompositions show that variables such as living in rural areas, household size, household dwelling and household dwelling characteristics account for the significant proportion of inequality in food and non-food expenditure.

Originality/value

The policy implication of the findings, among others, is that policies should focus on addressing inequality within rural and urban areas, especially with respect to non-food expenditure than in inequality existing between urban and rural areas. These non-food expenditures include expenditure in education, health, energy, accommodation, water and sanitation.

Details

International Journal of Development Issues, vol. 17 no. 3
Type: Research Article
ISSN: 1446-8956

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Book part
Publication date: 30 September 2014

Jürgen Faik and Uwe Fachinger

In the wake of the Stiglitz Commission, we assess German economic well-being by considering income, wealth and consumption. A decomposition approach is used to test for…

Abstract

In the wake of the Stiglitz Commission, we assess German economic well-being by considering income, wealth and consumption. A decomposition approach is used to test for corresponding inequality differences of these well-being dimensions. Total inequality is decomposed into within- and between-group inequality (via a normalised coefficient of variation). The decompositions are categorised into those that refer to socio-demographic characteristics (place of residence, age, household type) and those belonging to different well-being (sub-)categories (potential and net income, expenditure and wealth categories). The empirical analyses are performed for Germany using the 2008 German Sample Survey of Income and Expenditure. By decomposing German well-being inequality in great detail, we shed light on its dimensions. Our analyses illustrate that it is necessary to consider all well-being dimensions to make statements about the material well-being of private households or individuals.

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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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Article
Publication date: 2 February 2015

Haitao Wu, Shijun Ding and Guanghua Wan

The purpose of this paper is to apply a poverty level decomposition approach to decompose the poverty by income sources and investigate the impact of government transfers…

Abstract

Purpose

The purpose of this paper is to apply a poverty level decomposition approach to decompose the poverty by income sources and investigate the impact of government transfers on income inequality and rural poverty.

Design/methodology/approach

This paper uses the decomposition method of inequality and the decomposition method of poverty level by resource endowments to decompose the overall inequality and the overall poverty by income sources.

Findings

It is found that unequal income distribution rather than income endowments is mainly responsible for the existence of poverty. Government transfers and relief income, aiming at the poor, help alleviate inequality and poverty, but are not targeting the poorest. Unequal distribution of production subsidies actually lead to higher poverty incidence.

Research limitations/implications

This paper has revealed that the poverty issue cannot be resolved with economic development alone if the issues including the inequality in income distribution are not solved. It is important to make government transfers/subsidies pro-poor.

Originality/value

A poverty level decomposition approach is first used to decompose the poverty by income sources in China.

Details

China Agricultural Economic Review, vol. 7 no. 1
Type: Research Article
ISSN: 1756-137X

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Article
Publication date: 2 August 2019

Aswini Kumar Mishra, Anil Kumar and Abhishek Sinha

Though Indian economy since 1980s has expanded very rapidly, yet the benefits of growth remain very unequally distributed. The purpose of this paper is to provide new…

Abstract

Purpose

Though Indian economy since 1980s has expanded very rapidly, yet the benefits of growth remain very unequally distributed. The purpose of this paper is to provide new evidence about the shape, intensity and decomposition of inequality change between 2005 and 2012. The authors find that Gini, as a measure of income inequality, has increased irrespective of geographic regions.

Design/methodology/approach

Based on a recent distribution analysis tool, “ABG,” the paper focuses on local inequality, and summarizes the shape of inequality in terms of three inequality parameters (α, β and γ) to examine how the income distributions have changed over time. Here, the central coefficient (α) measures inequality at the median level, with adjustment parameters at the top (β) and bottom (γ).

Findings

The results reveal that at the middle of distribution (α), there is almost the same inequality in both the periods, but the coefficients on the curvature parameters β and γ show that there is increasing inequality in the subsequent period. Finally, an analysis of decomposition of inequality change suggests that though income growth was progressive, however, this equalizing effect was more than offset by the disequalizing effect of income reranking.

Research limitations/implications

This paper shows how it can be possible both for “the poor” to fare badly relatively to “the rich” and for income growth to be pro-poor.

Practical implications

This paper stresses the significance of inequality reduction.

Social implications

Inequality reduction is very much imperative in ending poverty and boosting shared prosperity.

Originality/value

Perhaps, this research work is first of its kind to examine the shape and decomposition of change in income inequality in India in recent years.

Details

Journal of Economic Studies, vol. 46 no. 3
Type: Research Article
ISSN: 0144-3585

Keywords

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