Between-group Inequality Research Articles

Computer Use and the U.S. Wage Distribution, 1984-2003

Given past estimates of wage increases associated with workplace computer use and higher usage rates among more skilled workers, the diffusion of computers has been interpreted as a mechanism for skill-biased technological change and consequent widening of the earnings distribution. I investigate this link by testing for direct effects of rising computer use on the distribution of wages in the United States. Analysis of data from the periodic CPS computer use supplements over the years 1984-2003 reveals that the positive association between workplace computer use and wages declines at higher skill levels, with the notable exception of a higher return to computer use for highly educated workers that emerged after 1997. Over my complete sample frame, however, the net association between rising computer use and the distribution of wages was quite limited. For broad groups defined by educational attainment, rising computer use was associated with rising between-group inequality that was offset by falling within-group inequality, suggesting that computers have exerted a leveling rather than a polarizing effect on wages.

International inequalities in per capita CO 2 emissions: A decomposition methodology by Kaya factors

In this paper, we provide a methodology for decomposing international inequalities in per capita CO 2 emissions into Kaya (multiplicative) factors and two interaction terms. We use the Theil index of inequality and show that this decomposition methodology can be extended for analyzing between- and within-group inequality components. We can thus analyze the factors behind inequalities in per capita CO 2 emissions across countries, between groups of countries and within groups of countries. The empirical illustration for international data suggests some points. Firstly, international inequality in per capita CO 2 emissions is mainly attributable to inequalities in per capita income levels, which helps to explain its recent reduction, while differences in carbon intensity of energy and energy intensity have made a less significant contribution. This result is strongly influenced by the performance of China and India. Secondly, the between-group inequality component, which is the biggest component, is also largely explained by the income factor. Thirdly, the within-group inequality component increased slightly during the period, something mainly due to the change in the income factor and the interaction terms in a few regions.

Inequality in Life Spans and a New Perspective on Mortality Convergence Across Industrialized Countries

The second half of the twentieth century witnessed substantial convergence in life expectancy around the world. We examine differences in the age pattern of mortality in industrialized countries over time to show that inequality in adult life spans, which we measure with the standard deviation of life table ages at death above age 10 years, S10, is increasingly responsible for the remaining divergence in mortality. We report striking differences in level and trend of S10 across industrialized countries since 1960, which cannot be explained by aggregate socioeconomic inequality or differential external-cause mortality. Rather, S10 reflects both within- and between-group inequalities in life spans and conveys new information about their combined magnitudes and trends. These findings suggest that the challenge for health policies in this century is to reduce inequality, not just lengthen life.

Inequality of energy intensities across OECD countries: a note

This paper proposes the use of Theil's second measure to analyze international energy intensity differences. This index allows differences to be broken down within and between groups of countries in a consistent manner. An analysis of OECD countries for the period 1971–1999 shows some basic points: first, the fall in energy intensities differences is attributable both to within-group and between-group inequality components; second, between-group inequalities are currently the main contributor to the whole inequality value; finally, a detailed exploration on within-group inequalities reveals the significant explanatory role played by EU-countries.

Regional Earnings Inequality in Great Britain: A Decomposition Analysis

This paper investigates the degree of earnings inequality in Great Britain over the period 1975-96 using individual-based data. It finds that the contribution of within-group inequality to both earnings inequality cross-sectionally and to its trend over time is substantially more important than the contribution of between-group inequality. Thus, the primary source of increasing inequality in the overall earnings distribution is increasing inequality within regions and not differences in average earnings between regions. A decomposition of the Gini coefficient is also adopted to illustrate how regional convergence in average earnings has been accompanied by increasing overall earnings inequality in the UK. A partir des données auprès des particuliers, cet article cherche à examiner l'importance de l'inégalité des revenus régionaux en Grande-Bretagne de 1975 à 1996. Il en résulte que la contribution de l'inégalité à l'intérieur du groupe à l'inégalité des revenus par échantillon et sur le temps s'avère nettement plus importante que ne l'est l'inégalité entre groupes. Ainsi, la source primordiale de la croissance de l'inégalité de la distribution globale des revenus est l'accroissement de l'inégalité intrarégionale et non pas l'écart des revenus moyens interrégionaux. On se sert aussi du coefficient Gini désagrégé afin de démontrer comment la convergence régionale des revenus moyens se fait conjointement avec une hausse globale de l'inégalité des revenus au Royaume-Uni. Dieser Aufsatz untersucht das Ausmaß der Unterschiede von Einkommen in Großbritannien im Zeitraum 1975-1996, wobei er sich auf Daten von individuellen Fällen stützt. Der Befund zeigt, daß der Beitrag der Unterschiede innerhalb einer Gruppe sowohl im Querschnitt als auch zu ihrer langfristigen Tendenz zum Einkommensunterschied weitaus bedeutender ist als der Beitrag zu Unterschieden zwischen verschiedenen Gruppen. Die Hauptquelle zunehmender Unterschiede in der allgemeinen Einkommensverteilung ist daher die zunehmende Ungleichheit der Regionen, und nicht die Unterschiede in durchschnittlichen Einkommen zwischen einzelnen Regionen. Eine Zerlegung des Gini Koeffizienten wird auch dazu benutzt, aufzuzeigen, wie regionale Konvergenz bei durchschnittlichen Einkommen mit zunehmenden allgemeinen Einkommensunterschieden im UK einhergeht.

Path Independent Inequality Measures

This paper explores a natural decomposition property motivated by Shorrocks (1980, Econometrica48, 613–625) and Anand (1983, “Inequality and poverty in Malaysia,” Oxford University Press) that we call path independent decomposability. Between-group inequality is found by applying the inequality measure to the smoothed distribution, which replaces each income in a subgroup with its representative income. Within-group inequality is the measure applied to the standardized distribution, which rescales subgroup distributions to a common representative income level. Path independence requires overall inequality to be the sum of these two terms. We derive the associated class of relative inequality measures—a single parameter family containing both the second Theil measure (the mean logarithmic deviation) and the variance of logarithms. Journal of Economic Literature Classification Numbers: C43, D31, D63, 015.

A general class of additively decomposable inequality measures

This paper presents and characterizes a two-parameter class of inequality measures that contains the generalized entropy measures, the variance of logarithms, the path independent measures of Foster and Shneyerov (1999) and several new classes of measures. The key axiom is a generalized form of additive decomposability which defines the within-group and between-group inequality terms using a generalized mean in place of the arithmetic mean. Our characterization result is proved without invoking any regularity assumption (such as continuity) on the functional form of the inequality measure; instead, it relies on a minimal form of the transfer principle – or consistency with the Lorenz criterion – over two-person distributions.

Dynamics of income inequality in Sweden

This paper investigates income inequality among individuals in Sweden overtime using generalized entropy measures in short-run (annual) and long-run (medium term) from 1978 to 1990. The results suggest that short-run inequality tends to decrease with fluctuations, partially due to transitory components. Long-run inequality declines in early years due to smoothing of transitory components. Further decline in long-run inequality is due to actual equalization. Gender, cohort, marital status, and region are used to investigate their implications. Between-group inequality due to gender and cohort are shown to be significant part of inequality. Within-group equalizations are generally more pronounced. Distinct group specific differences are observed.

Aggregate units, within-group inequality and the decomposition of inequality measures

The decomposition of inequality measures according to within-group and between-group contributions has been addressed up to now (a) to identifying measures which satisfy in a natural way such decomposition, being characterized by special regularity assumptions, and (b) to the preliminary determination of the between-group inequality as the most primitive one, letting the within-group term as residual with respect to total inequality. Both approaches reveal some drawbacks in the use and interpretation of inequality measures. Therefore an alternative approach is proposed, which is applicable—as well as (b)—to every inequality measure we start from a reflecting only the within-group inequality, so that the corresponding measure Iw can be computed, leaving the between group term IB as a residual with respect to the total inequality I. This procedure assumes that the groups are composed by the same number m of aggregate units, or by some replicas of the same of aggregate units; on this basis an percentile distribution is defined as a averaged over all groups, clearly responsible for the within-group inequality; actually the Lorenz curve of this appears as a weighted mean of the group Lorenz curves. As a rule the application of this procedure to particular inequality measures requires the computation of the average percentile distribution; however, for the Gini ratio and the relative mean deviation with respect to the median Iw turns out to be the weighted mean of the measures computed on the groups. In the last paragraph the above procedure is applied to several Pareto distributions, composed of two or four groups.

Decomposition of inequality measures and a comparative analysis

The main objectives of the paper are to decompose Atkinson's measure into within-group and between-group inequality and to compare it with decompositions of inequality measures, like the Gini coefficient, variance of logarithms, Theil's entropy index and the square of the coefficient of variation. Atkinson's inequality index is given an interpretation of mean order β and then it is decomposed for population subgroups. Various other measures are considered for decompositions and a variety of decomposition schemes for Gini coefficient and other measures in the literature is reviewed and commented upon. Empirical analysis using U.S.A. and U.K. data are performed on the basis of income distribution data classified by family size. For various decomposition schemes, contribution to between size-group and within size-group inequalities are compared in percentage terms. Comparisons are also made over time for the years 1964 and 1974 both for U.S.A. and U.K. and the result indicates that within size-group income inequality has declined while between size group and total income inequality shows an increase. Three important properties of Atkinson's inequality index are proved in the appendix.

On the Structure of Additive Inequality Measures

This paper examines the properties of the family of additively separable inequality measures. In particular it investigates the possibility of decomposition of such a measure by population subgroups, and the scope for treating different groups in different ways within the overall measure. This differential treatment of subpopulations is potentially very important, as we shall see from a simplified example. Table I depicts an eight- person society arranged into two groups so that persons 5 to 8 (in group 2) have exactly twice the incomes of persons 1 to 4 (in group 1) respectively. Call the values of the inequality measure for group 1, for group 2 and for the whole population IP, j2 and I* respectively. If the inequality measure used is mean-independent and the same for either group and for the total, and if each income recipient is identical in every respect other than income, we expect Table I to yield I = 12 and I*> I. If the measure is decomposable then we can write I* = f(I', 12, PB) where jE is between-group inequality found by applying the measure to the vector of group average incomes ($2,500, $5,000). TABLE I