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Further results on the regression-based approach to inequality decomposition with evidence from India

Bigotta, Maurizio ; Krishnakumar, Jaya ; Rani, Uma

In: Empirical Economics, 2015, vol. 48, no. 3, p. 1233-1266

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    Titre
    • Further results on the regression-based approach to inequality decomposition with evidence from India
    Auteur
    • Bigotta, Maurizio. National Centre for Competence in Research, project LIVES, University of Geneva, Geneva, Switzerland
    • Krishnakumar, Jaya. Institute of Economics and Econometrics, University of Geneva, 40 Bd. du Pont d'Arve, 1211, Geneva 4, Switzerland
    • Rani, Uma. Research Department, ILO, Geneva, Switzerland
    Type de document
    • Postprint
    Langue
    • Inglese
    Publié dans
    • Empirical Economics, 2015, vol. 48, no. 3, p. 1233-1266. Springer Berlin Heidelberg
    Autre version électronique
    Identifiant OAI-PMH
    • oai:doc.rero.ch:331574
    Summary
    The paper revisits regression-based inequality decomposition, derives further theoretical results on the factor shares and applies them in an empirical setting. Noting that the approach based on Shorrocks and Fields is not directly applicable to an important welfare-based inequality index, namely Atkinson's inequality index, we generalise it to derive shares for this index. We also derive the asymptotic distribution of all share estimators for obtaining their standard errors necessary for drawing inference. Finally, we use our theoretical results to examine the major factors that contribute to income inequality in India. Our results show that education and household size are the two most dominant factors contributing to income inequality in both rural and urban areas, followed by employment status and regional differences.