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Inequality decomposition by factor component: a “rank-correlation” approach illustrated on the Taiwanese case

Published online by Cambridge University Press:  17 August 2016

Martin Fournier
Martin Fournier*
Affiliation:
CERDI-IDREC (Université d’Auvergne) and CREST (Laboratoire de Microéconométrie)**
*
[email protected], Tél.:(33)04 73 17 75 00, Fax:(33)04 73 17 74 28
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Summary

This paper systematises the method initiated by Burtless (1999) and provides a general framework for decomposing inequality by factor components. It has the double advantage over usual decomposition procedures to allow for a decomposition of changes in the whole income distribution and to distinguish between the effect of marginal distribution changes of income sources and that of changes in correlation between income sources. An illustration is provided for Taiwan, which emphasises the central role played by changes in assortative mating of spouses.

Résumé

Résumé

Cet article systématise l’approche initiée par Burtless (1999) en une méthode générale de décomposition de l’inégalité par source qui présente le double avantage, par rapport aux décompositions usuelles, de permettre une décomposition de l’évolution de la distribution des revenus et de distinguer l’effet de la modification des distributions marginales des sources de celui de la modification de la structure de corrélation entre les sources. Une illustration menée sur Taiwan montre en particulier l’importance jouée par l’évolution de la corrélation entre les revenus des époux.

Keywords

Income distributionInequality decomposition by factor componentsTaiwanD3O15O53D3O15O53
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 67 , Issue 4 , 2001 , pp. 381 - 403
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2001 

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Footnotes

*

I would like to thank François Bourguignon, Denis Fougères, François Gardes, Sylviane Guillaumont-Jeanneney, Marc Gurgand and Sylvie Démurger, participants at seminars in CERDI and CREST, as well as an anonymous referee for helpful comments.

**

Address : CERDI-IDREC, 65, bd François Mitterrand, 63000 Clermont-Ferrand

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