Decomposition of an aggregate measure of income distribution

Abstract

Aggregate Gini coefficients, which are measures of the inequality of the distribution of income, can be decomposed in terms of types of income, provided the constituent coefficients are defined over family units ordered according to their total income. This decomposition provides a valuable means of examining cyclical shifts affecting income equality. However, other decompositions associated with specific socio-economic or demographic criteria are shown to yield collective expressions which contain both the distributional coefficients for the particular subgroups into which the population is classified, and significant interaction terms. These interaction terms prevent the identification of a clear relationship between the overall distribution of income and the distribution of income for each of the specified subgroups. Further research in this area should focus on distributions within structurally homogeneous groups, using informal procedures for linking these distributions to form impressions of aggregate developments.