A longitudinal decomposition of Zenga’s new inequality Index - Mauro Mussini, Michele Zenga - Vita e Pensiero - Articolo Statistica & Applicazioni

A longitudinal decomposition of Zenga’s new inequality Index

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A longitudinal decomposition of Zenga’s new inequality Index
Article
Journal STATISTICA & APPLICAZIONI
Issue STATISTICA & APPLICAZIONI - 2013 - 1
Title A longitudinal decomposition of Zenga’s new inequality Index
Authors ,
Publisher Vita e Pensiero
Format Article | Pdf
Online da 01-2013
Issn 1824-6672 (print) | 2283-6659 (digital)
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The paper proposes a three-term decomposition of Zenga’s new inequality index over time. Given an initial and a final time, the link among inequality trend, re-ranking, and income growth is explained by decomposing the inequality index at the final time into three components: one measuring the effect of re-ranking between individuals, a second term gauging the effect of disproportional growth between individuals’ incomes, and a third component measuring the impact of the inequality existing at the initial time. The decomposition allows one to distinguish the determinants of inequality change from the contribution of the inequality at the initial time to the inequality at the final time. We applied the decomposition to Italian household income data collected by the Survey on Household Income and Wealth of the Bank of Italy, waves 2008-2010.