Secondly, unconditional quantile regression is used to examine the effects of age on different points of the wealth distribution. Regression based shapley value decomposition rbdineq. This paper explores pitfalls in regression based inequality decompositions. Pdf regressionbased inequality decomposition researchgate. It allows inequality accounting but not a causal analysis. The building blocks of international ecological footprint inequality. It is found that geography has been the dominant factor but is becoming less important in explaining total inequality. The approach makes use of methods for decomposing inequality by income source or factor components.
Policy suggestions and implications for future research are given in section 4. Further results on the regressionbased approach to. Jan 05, 2002 to test whether the relation between income inequality and mortality found in us states is because of different levels of formal education. Regression based inequality decomposition statalist. The approach employed in this study is regression based inequality decomposition using the shapley value decomposition framework. Variance function regressions for studying inequality. Social class is one of the most important concepts within as and a level sociology because of the relationship between social class. The results show that education, wealth, as well as the employment sector are significant contributors to income inequality in indonesia. The decomposition method based on the rif regression can provide a better and more detailed decomposition in the spirit of the traditional mean ob decomposition as detailed by firpo et al. The regressionbased inequality decomposition will be employed in this study. Based on the inequality decomposition of regression equation, we found that the regional original industry specialization was the most important factor of regional industry specialization. This paper represents an early attempt to apply the regression based decomposition framework to the study of inequality accounting in rural china, using household level data.
Booklet of abstracts contents conference schedule 2 programme 3 list of abstracts 20. This studies focusing on investigating the determinant of inequality in ethiopia by using the raw data collected from central stastical authority based on the regression decomposition of fields methodology. Decomposition of socioeconomic inequality in health among an. We use a regression based inequality decomposition approach. Data for the analysis come from the 199293, 199899, and 200506 indian national family health surveys. Understanding wealthbased inequalities in child health in. Different methods of decomposing changes in poverty into growth. Noting that the approach based on shorrocks and fields is not directly applicable to an important welfare based inequality index, namely atkinsons inequality index, we. A direct regression approach to decomposing socioeconomic. Literature on inequality decomposition points to a wide regional variation in both the components and effects of income inequality.
It provides an exact decomposition of the inequality. Regressionbased inequality decomposition, following fields 2003. This paper aims to focus on trends in oregon counties as part of the common approach to study inequality decomposition on a localized basis. Regressionbased approaches for the decomposition of income. Then, decomposition results and changes in the contribution to income inequality will be presented. Unconditional quantile regression based decomposition method. Inequality decompositions abstract we show how classic source decomposition and subgroup decomposition meth ods can be reconciled with regression methodology used in the recent liter ature. What is the point of decomposing income inequality and how should we do it. Regressionbased inequality decomposition ideasrepec. Working paper, department of sociology, harvard university. The formulae used are those proposed by fields 2003 which, in turn, are closely related to those proposed by shorrocks 1982 for non regression based decomposition of inequality by income source. This method aims to explain the causes of socioeconomic inequality, not by focussing on the variables that form the covariance, but by directly decomposing the weighted covariance of health and socioeconomic rank, i. Using linear regression at this step generates a heterogeneous set of regression coefficients that we use in a regression based decomposition of total inequality in the biomarkers. The procedure does not impose any restrictions on the underlying regression model and it can be applied to any inequality measures.
Moreover, household level data are used in this chapter, complementing the existing literature, which is mostly based on aggregate data. Kessels marcel bluhm the wang yannan institute for studies in economics, xiamen university and center for financial studies, goethe university frankfurt xiamen, 19 october 20. Several of the key concepts of income inequality, such as the gini coefficient, were developed over 100 years ago. Conversely, inequality decomposition by population subgroups provides rather limited information on the fundamental determinants of inequality, e. Regression based inequality decomposition science publishing. A simple procedure is developed for rectifying these pitfalls. Conventional decompositions, by factor components or by population subgroups, only provide limited information on the determinants of income inequality. A temporal analysis of the urbanrural inequality decomposition based on quantile regression analysis also finds that urbanrural inequality decreased over the study period, and inequality between the lower end and the upper end of the consumption distribution reduced relatively in.
Recent applied work has reawakened interest in inequality decomposition by focusing on the use of regression based rb approaches to avoid some of the restrictions of the traditional methods. The regression based inequality decomposition will be employed in this study. In doing so, we identify the underlying blocks of intragenerational inequality in order deal with policy recommendations aimed at both sustainability and equity. A particular advantage of the regressionbased decomposition is that it enables identification as well as quantification of root causes or determinants of inequality. Jenkins university college of swansea final version received 11 november 1993. Regressionbased approaches for the decomposition of. Noting that the approach based on shorrocks and fields is not directly applicable to an important welfarebased inequality index, namely atkinsons inequality index, we generalise it to derive shares for this index. Decomposition analyses for the uk, 197186 by stephen p. Fiorioy 6th december 2005 decomposition analysis of inequality is important for understanding the main determinants of inequality and for policy analysis. A new method, with application to the distribution of earnings in the united states, research in labor economics, 2003. In contrast to previous emissions inequality decompositions, which were based on identity relationships, this methodology.
A decomposition analysis of the trend in uk income inequality diliz mookherjee and anthony shorrocks post war britain has experienced a number of dramatic demographic and social changes that have undoubtedly influenced the distribution of income. Compared with the classical methodologies, the regressionbased method gives the opportunity of quantifying the. The paper revisits regressionbased inequality decomposition, derives further theoretical results on the factor shares and applies them in an empirical setting. Shorrocks this paper disaggregates the income of individuals or households into different factor components, such as earnings, investment income, and transfer payments, and considers how to assess the contributions of these sources to total income inequality. Fields accounting for income inequality and its change. Regressionbased inequality decomposition following fields. The contribution of each source to measured income inequality is the sum of its weighted marginal contributions in all possible configurations of sources as. However, the study of income inequality has a long history. I it allows inequality accounting but not a causal analysis. Your story matters citation western, bruce and deirdre bloome. Regressionbased inequality decomposition, following. The contribution of each source to measured income inequality is. I need to implement heckman model with inequality decomposition. Siyavulas quality, curriculumaligned maths and science textbooks span grades 412.
People in the same social class typically share a similar level of wealth, educational achievement, type of job and income. Unconditional quantile regressionbased decomposition. Regressionbased approaches for the decomposition of income inequality in italy, 19982008 rosalba manna 1, andrea regoli 2 abstract decompositions by population subgroups and by income sources represent the traditional techniques for decomposing income inequality. Based decomposition fields, 2003 to disentangle the contributions of impact drivers to the asymmetries among countries in natural resource consumption as measured by per capita ef. A regression based inequality decomposition analysis munich. Daniel westbrook department of economics, georgetown university economics and research department, asian development bank march 2006 abstract.
This paper attempts to explain wealth based inequalities in child mortality and malnutrition using a regression based decomposition approach. We propose an instrumental variable quantile regression based method to solve the endogeneity problem and decompose the rich dad effect on income inequality into the composition effect and the income structure effect. Decomposition of differences in distributions using quantile regression the standard linear regression assumes the relationship between the regressors and the outcome variable based on the conditional mean function. In order to understand the source of income inequality, economists started to develop methods for regression based decomposition of inequality in the 1970s. Results reveal that the age effect is heterogeneous across the distribution. Shapley inequality decomposition, including the nested shapley chantreuil and trannoy 1999 and the owen decomposition shorrocks 1999, based on dening a hierarchical structure of incomes. This talk discusses ineqrbd, a program for ols regressionbased decomposition suggested by g. This paper investigates the impacts of financial development, urbanization, and globalization on income inequality in china by applying a regression based inequality decomposition approach to panel data on chinese provinces. Abstract the paper revisits regression based inequality decomposition, derives further theoretical results on the factor shares and applies them in an empirical setting. An unconditional quantile regression based decomposition. Ill health is commonly thought to be concentrated in disadvantaged groups, especially in developing. Multiple variables can be added to the function in order to calculate the contribution of each individual variable including the residual to the inequality.
Regional updates and estimation of a panel of income. Regression based inequality decomposition 09 sep 2017, 04. Is it possible to use regression based inequality decomposition userwritten command ineqrbd where dependent variable i. A quantile regression decomposition of urbanrural inequality. A general method for decomposing the causes of socioeconomic. Since the early 1970s, economists have used the regression based approach to inequality. In this framework, two regressionbased decomposition methodologies are. The procedure does not impose any restrictions on the underlying regression model and it can be applied to any inequality measure s. A quantile regression decomposition of urbanrural inequality in vietnam binh t. Methodology this paper uses the regression based decomposition method of fields 2003. The fields approach to rb decomposition of inequality i following fields suggestion, the ols estimate of 3 can be used for inequality decomposition.
These findings suggest that any policy aimed at reducing unequal access to. Sign your school up to use siyavulas practice service in your classroom as part of your lesson, or for homework. Variance function regressions for studying inequality the harvard community has made this article openly available. Inequalities in child health are measured using the concentration index. Statistical software components from boston college department of economics. The building blocks of international ecological footprint. The regressionbased inequality decomposition by income sources and. The procedure does not impose any restrictions on the underlying regression model and it can be applied to any inequ. This talk discusses ineqrbd, a program for ols regression based decomposition suggested by g. Dec 31, 2015 this paper uses the possibilities provided by the regressionbased inequality decomposition fields in res labor econ 22. Math explained in easy language, plus puzzles, games, quizzes, worksheets and a forum. This new approach builds on the concept of regression of a recentered influence function rif.
University of naples parthenope, department of statistics and mathematics for economic research. This paper explores pitfalls in regressionbased inequality decompositions. Regressionbased inequality decomposition unuwider united. They expressed household income as a linear function of explanatory variables and used the regression coefficients to calculate the decomposed variance for all variables in the model. Decomposing the rich dad effect on income inequality using.
Empirical examples are provided to demonstrate the use of the procedure, and to contrast our results with those based on recent developments of fields and yoo 2000 and morduch and sicular 2002. Stata module to calculate regressionbased inequality decomposition. Jul 26, 2011 later, murdoch and sicular and fields extended shorrocks approach to a regression based decomposition of inequality. This paper applies the regression based inequality decomposition approach to explore determinants of income inequality in cameroon using the 2007 cameroon household consumption survey. We also highlight some pitfalls that arise from uncritical use of the regression approach. Decomposition of socioeconomic inequality in health among an elderly cohort in india. The impacts of financial development, urbanization, and. I recent applied work has reawakened interest in inequality decomposition by focusing on the use of regression based rb approaches to avoid some of the restrictions of the traditional. In order to decompose the source of income inequality, the shapley value decomposition framework proposed by shorrocks 1999 and the method employed by. Pdf this talk discusses ineqrbd, a program for ols regressionbased decomposition suggested by g. The response variable of our regression model is a simple reformulation of the measure of overall. Following fairlie 2005, i extend the ob decomposition to nonlinear rif regression models using a logistic regression. This paper represents an early attempt to apply the regression. Part of the economic studies in inequality, social exclusion and wellbeing book series eiap abstract this study investigates the determinants of income diversification for nonfarm activities using a twopart model and a breakdown of income inequality using gini and regression based inequality decompositions using data from the ethiopian.
Source of inequality in consumption expenditure in india. He is principal economist at the asian development bank. Inequality decomposition by factor components authors. There has been a rise in the number of pensioners, whose incomes are relatively low. This function uses a multivariate regression based decomposition method. Once combined with conventional decomposition methods or the shapley value approach of shorrocks 1999, what.
Regressionbased decomposition using household data guanghua wan and zhangyue zhou abstract a considerable literature exists on the measurement of income inequality in china and its increasing trend. Inequality decomposition a reconciliation lse research online. Regression based approaches for the decomposition of income inequality in italy, 19982008 rosalba manna 1, andrea regoli 2 abstract decompositions by population subgroups and by income sources represent the traditional techniques for decomposing income inequality. The decomposition based regression analysis finds that household size is responsible for the maximum share of inequality in the total inequality of the average mpce and predicted mpce in the both urban and rural areas in 200405 and 201112. Social class refers to divisions in society based on economic and social status.
Interpreting inequality decomposition results statalist. Compared with the classical methodologies, the regression based method gives the. Decomposition procedures for distributional analysis. Diversification into nonfarm activities in ethiopia. Formerly project director at unuwider, he has taught and researched in development economics an applied econometrics at a range of universities including the university of new england and the university of sydney and he is an honorary professor at. The approach makes use of methods for decomposing inequality by income source or factor components, shorrocks 1982, not by population group. The study employs an unconditional quantile regression and recently proposed decomposition technique based on recentred influence functions.
What lies behind rising earnings inequality in urban china. Unconditional quantile regressionbased decomposition method. We find significant spatial differences in consumption expenditure across selected quantiles, with ruralurban inequalities driven largely by differences in returns to households endowments. Eight explanations for uk income inequality trends between 1971 and 1986 are assessed by pooling evidence from inequality index decompositions by population subgroup and by.
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