Factor components of inequality: a cross-country study

Cecilia Garcia-Penalosa () and Elsa Orgiazzi ()

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Abstract: This paper uses data from the Luxembourg Income Study to examine some of the forces that have driven changes in household income inequality over the last three decades of the twentieth century. We decompose inequality for six countries (Canada, Germany, Norway, Sweden, the U.K., and the U.S.) into the three sources of market income (earnings, property income, and income from self-employment) and taxes and transfers. Our findings indicate that although changes in the distribution of earnings are an important force behind recent trends, they are not the only one. Greater earnings dispersion has in some cases been accompanied by a reduction in the share of earnings which dampened its impact on overall household income inequality. In some countries the contribution of self-employment income to inequality has been on the rise, while in others, increases in inequality in capital income account for a substantial fraction of the observed distributional changes.

Keywords: decomposition by population subgroups; factor decomposition; income inequality (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (24)

Published in Review of Income and Wealth, 2013, 59 (4), pp.689-727. ⟨10.1111/roiw.12054⟩

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Related works:
Journal Article: Factor Components of Inequality: A Cross-Country Study (2013)
Working Paper: Factor Components of Inequality: A Cross-Country Study (2013)
Working Paper: Factor Components of Inequality: A Cross-Country Study (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01101980

DOI: 10.1111/roiw.12054

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