Advertisement

Policy Analysis Using the Decomposition of the Gini by Non-marginal Analysis

  • Shlomo Yitzhaki
  • Edna Schechtman
Chapter
Part of the Springer Series in Statistics book series (SSS, volume 272)

Abstract

The objective of this chapter is to demonstrate the usefulness of several decompositions of the Gini (and the EG) in order to analyze the strengths and the weaknesses of various policies. We concentrate on distributional issues. The other component of the problem of tax reform—the estimation of the marginal cost of taxation—is identical to the description given in Chap. 14 hence it will not be repeated here.

Keywords

Income Inequality Transition Matrix Gini Coefficient Gini Index Transition Matrice 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

References

  1. Aaberge, R., Bjørklund, A., Jäntti, M., Palme, M., Pedersen, P. J., Smith, N., et al. (2002). Income inequality and income mobility in the Scandinavian countries compared to the United States. Review of Income and Wealth, 48(4), 443–469.CrossRefGoogle Scholar
  2. Achdut, L. (1996). Income inequality, income composition and macroeconomic trends: Israel, 1979–93. Economica, 63(250), S1–S27.CrossRefGoogle Scholar
  3. Atkinson, A. B. (1979). Horizontal equity and the distribution of the tax burden. In H. J. Aaron & M. J. Boskin (Eds.), The economics of taxation. Washington, DC: The Brookings Institution.Google Scholar
  4. Atkinson, A. B. (1983). The measurement of economic mobility, in social justice and public policy. Sussex: Wheatsheaf Books Ltd.Google Scholar
  5. Atkinson, A. B., & Bourguignon, F. (1992). Empirical studies of earnings mobility. Chur: Harwood.Google Scholar
  6. Bartholomew, D. J. (1982). Stochastic models for social processes (3rd ed.). New York: John Wiley & Sons (First edition 1967).MATHGoogle Scholar
  7. Beblo, M., & Knaus, T. (2). Measuring Income Inequality in Euroland. Review of Income and Wealth, 47(3), 301–320.CrossRefGoogle Scholar
  8. Beenstock, M. (2002a). Mobility and longitudinal inequality in earnings: Israel 1983–1995. Falk Institute, Discussion paper no. 02.03.Google Scholar
  9. Beenstock, M. (2002b). Intergenerational mobility: Earnings and education in Israel. Falk Institute, Discussion paper no. 02.05.Google Scholar
  10. Beenstock, M. (2004). Rank and quantity mobility in the empirical dynamics of inequality. Review of Income and Wealth, 50(4), 519–541.CrossRefGoogle Scholar
  11. Beenstock, M., & Felsenstein, D. (2007). Mobility and mean reversion in the dynamics of regional inequality. International Regional Science Review, 30(4), 335–361.CrossRefGoogle Scholar
  12. Berri, A., Lyk-Jensen, S. V., Mulalic, I., & Zachariadis, T. (2010). Transport consumption inequalities and redistributive effects of taxes: A comparison of France, Denmark and Cyprus, ECINEQ WP 2010-159. http://www.ecineq.org/milano/WP/ECINEQ2010-159.pdf.
  13. Bibby, J. (1975). Methods of measuring mobility. Quality and Quantity, 9, 107–136.MathSciNetCrossRefGoogle Scholar
  14. Boudon, R. (1973). Mathematical structures of social mobility. New York: Elsevier Scientific Publishing Company.Google Scholar
  15. Breen, R., Garcia-Penalosa, C., & Orgiazzi, E. (2008). Factor components of inequality: Cross-country differences and time changes. LIS Working Paper Series #503.Google Scholar
  16. Burkhauser, R. V., Frick, J. R., & Schwarze, J. (1997). A comparison of alternative measures of economic well-being for Germany and the United States. Review of Income and Wealth, 43(2), 153–171.CrossRefGoogle Scholar
  17. Burkhauser, R. V., & Poupore, J. G. (1997). A cross-national comparison of permanent inequality in the United States and Germany. Review of Economics and Statistics, 79, 10–17.CrossRefGoogle Scholar
  18. Carty, K., Roshal, V., & Yitzhaki, S. (2009). Inequality comparisons: The role of government and demographic structure. Working paper. SSRN.COM.Google Scholar
  19. Cord, L., & Wodon, Q. (2). Do Mexico’s agricultural programs alleviate poverty? Evidence from the ejido sector. Cuadernos de Economia, 114, 239–256.Google Scholar
  20. Coulter, F. A. E., Cowell, F. A., & Jenkins, S. P. (1992). Equivalence scale relativities and the extent of inequality and poverty. The Economic Journal, 102(414), 1067–1082.CrossRefGoogle Scholar
  21. Cowell, F. A. (1984). The structure of American income inequality. Review of Income and Wealth, 30(3), 351–375.CrossRefGoogle Scholar
  22. Creedy, J. (1979). The inequality of earning and the accounting period. Scottish Journal of Political Economy, 26, 89–96.CrossRefGoogle Scholar
  23. Creedy, J. (1991). Lifetime earning and inequality. Economic Record, 67, 46–58.CrossRefGoogle Scholar
  24. Dardanoni, V. (1993). Measurement social mobility. Journal of Economic Theory, 61, 372–394.MATHCrossRefGoogle Scholar
  25. De Vos, K., & Zaidi, M. A. (1997). Equivalence scale sensitivity of poverty statistics the members states of the European community. Review of Income and Wealth, 43(3), 319–333.CrossRefGoogle Scholar
  26. Ebert, U. (1997). Social Welfare when needs differ: An axiomatic approach. Econometrica, 64, 233–244.Google Scholar
  27. Ebert, U. (1999). Using equivalence income of equivalent adults to rank income distributions when household types are different. Social Choice and Welfare, 16, 233–258.MATHCrossRefGoogle Scholar
  28. Ebert, U., & Moyes, P. (2000). An axiomatic characterization of Yitzhaki’s index of individual deprivation. Economics Letters, 68, 263–270.MATHCrossRefGoogle Scholar
  29. Feldstein, M. S. (1976). On the theory of tax reform. Journal of Public Economic, 6, 77–104.CrossRefGoogle Scholar
  30. Fields, G. S., & Ok, E. A. (1996). The meaning and measurement of income mobility. Journal of Economic Theory, 71(2 (November)), 349–377.MATHCrossRefGoogle Scholar
  31. Fields, G. S., & Ok, E. A. (1999). The measurement of income mobility. In J. Silber (Ed.), Handbook of income inequality measurement (pp. 557–598). Boston, MA: Kluwer Academic Publishers.CrossRefGoogle Scholar
  32. Finkel, Y., Artsev, Y., & Yitzhaki, S. (2006). Inequality measurement and time structure of household income in Israel. Journal of Economic Inequality, 4(2), 153–179.CrossRefGoogle Scholar
  33. Fisher, J. D., & Johnson, D. S. (2006). Consumption mobility in the United States: Evidence from two panel data sets. The B. E. Journal of Economic Analysis & Policy, 6(1). http://www.bepress.com/bejeap/topics/vol6/iss1/art16.
  34. Friedman, M. (1951). A method of comparing incomes of families differing in composition. Studies in Income and Wealth, vol. 15 (pp. 10–24). New York: National Bureau of Economic Research.Google Scholar
  35. Geweke, J., Marshall, R. C., & Zarkin, G. A. (1986). Mobility indices in continuous time Markov chains. Econometrica, 54(6), 1407–1423.MathSciNetMATHCrossRefGoogle Scholar
  36. Gibson, J., Huang, J., & Rozelle, S. (2). Why is income inequality so low in China compared to other countries? The effect of household survey method. Economics Letters, 71, 329–333.CrossRefGoogle Scholar
  37. Jäntti, M. (1997). Inequality in five countries in the 1980s: The role of demographic shifts, markets and government policies. Economica, 64, 415–440.CrossRefGoogle Scholar
  38. Jenkins, S. P. (1995). Accounting for inequality trends: Decomposition analyses for the UK, 1971-86. Economica, 62, 29–63.CrossRefGoogle Scholar
  39. Kakwani, N. C. (1984). On the measurement of tax progressivity and redistributive effects of taxes with applications to horizontal and vertical equity. Advances in Econometrics, 3, 149–168.Google Scholar
  40. Keeney, M. (2000). The distributional impact of direct payments on Irish farm income. Journal of Farm Economics, 51(2 (May)), 252–263.Google Scholar
  41. King, M. A. (1983). An index of inequality: With application to horizontal equity and social mobility. Econometrica, 51, 99–115.MATHCrossRefGoogle Scholar
  42. Lambert, P. J., & Aronson, J. R. (1993). Inequality decomposition analysis and the Gini coefficient revisited. Economic Journal, 103, 1221–1227.CrossRefGoogle Scholar
  43. Lazaridis, P. (2000). Decomposition of food expenditure inequality: An application of the extended Gini coefficient to Greek micro-data. Social Indicators Research, 52(2), 179–193.CrossRefGoogle Scholar
  44. Lerman, R. I., & Yitzhaki, S. (1995). Changing ranks and inequality impacts of taxes and transfers. National Tax Journal, 48(1), 45–59.Google Scholar
  45. Marshall, A. W., & Olkin, I. (1979). Inequalities: Theory of majorization and its application. New York: Academic Press.Google Scholar
  46. Mirrlees, J. (1971). An exploration in the theory of optimum income taxation. Review of Economic Studies, 38, 175–208.MATHCrossRefGoogle Scholar
  47. Nolan, B., & Maitre, B. (2000). A comparative perspective on trends in income inequality in Ireland. Economic and Social Review, 31(4), 329–350.Google Scholar
  48. Nolan, B., & Smeeding, T. M. (2005). Ireland’s income distribution in comparative perspective. Review of Income and Wealth, 51(4), 537–560.CrossRefGoogle Scholar
  49. OECD. (2006). What are equivalence scales, OECD Social Policy Division. http://www.oecd.org/dataoecd/6152/354111111.pdf.
  50. Plotnick, R. (1981). A measure of horizontal inequity. Review of Economics and Statistics, 63, 283–287.CrossRefGoogle Scholar
  51. Prais, S. J. (1955). Measuring social mobility. Journal of the Royal Statistical Society, A118, 56–66.Google Scholar
  52. Pyatt, G. (1976). On the interpretation and disaggregation of Gini coefficient. The Economic Journal, 86(342), 243–255.CrossRefGoogle Scholar
  53. Saunders, P. (2005). The $85 billion tax/welfare churn. Issue analysis, 57. Sydney: Centre for Independent Studies.Google Scholar
  54. Schechtman, E., & Yitzhaki, S. (1999). On the proper bounds of the Gini correlation. Economics Letters, 63(2), 133–138.MathSciNetMATHCrossRefGoogle Scholar
  55. Shorrocks, A. J. (1978a). Measurement of mobility. Econometrica, 46, 1013–1024.MATHCrossRefGoogle Scholar
  56. Shorrocks, A. J. (1978b). Income inequality and income mobility. Journal of Economic Theory, 19, 376–393.MathSciNetMATHCrossRefGoogle Scholar
  57. Shorrocks, A. J. (1993). On the hart measure of income mobility. In M. Casson & J. Creedy (Eds.), Industrial concentrations and economic inequality. Cambridge: Edward Elgar.Google Scholar
  58. Silber, J. (1995). Horizontal inequity, the Gini index, and the measurement of distributional change. Research on Economic Inequality, 6, 379–392.Google Scholar
  59. Slemrod, J. (1992). Taxation and inequality: A time-exposure perspective. In J. M. Poterba (Ed.), Tax policy and the economy (pp. 105–128). Cambridge, MA: MIT Press.Google Scholar
  60. Slemrod, J., & Yitzhaki, S. (2002). Tax avoidance, evasion, and administration. In A. Auerbach & M. Feldstein (Eds.), Handbook of public economics, 3, Ch. 22 (pp. 1423–1470). Amsterdam: Elsevier Science B.V.CrossRefGoogle Scholar
  61. Whiteford, P. (2006). The welfare expenditure debate: Economic myths of the left and the right revisited. The Economic and Labour Relations Review, 17(1), 33–78.CrossRefGoogle Scholar
  62. Wodon, Q. (2). Income mobility and risk during the business cycle: Comparing adjustments in labour markets in two Latin-American countries. Economics of Transition, 9(2), 449–461.CrossRefGoogle Scholar
  63. Wodon, Q., & Yitzhaki, S. (2003a). Inequality and the accounting period. Economics Bulletin, 4(36), 1–8.Google Scholar
  64. Wolff, E. N. (1996). International comparisons of wealth inequality. Review of Income and Wealth, 42(4), 433–451.MathSciNetCrossRefGoogle Scholar
  65. Wolff, E. N., & Zacharias, A. (2007a). The distributional consequences of government spending and taxation in the US, 1989 and 2000. Review of Income and Wealth, 53(4), 692–715.CrossRefGoogle Scholar
  66. Yitzhaki, S., & Wodon, Q. (2004). Inequality, mobility, and horizontal inequity. In Amiel, Y., & Bishop, J. A. (Eds.), Research on economic inequality, studies on economic well-being: Essays in honor of John P. Formby, 12 (pp. 177–198).Google Scholar

Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  • Shlomo Yitzhaki
    • 1
  • Edna Schechtman
    • 2
  1. 1.Department of EconomicsThe Hebrew UniversityJerusalemIsrael
  2. 2.Department of Industrial Engineering and ManagementBen-Gurion University of the NegevBeer-ShevaIsrael

Personalised recommendations