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DECOMPOSING THEIL'S INDEX OF INCOME INEQUALITY: A REPLY
Author(s) -
Adelman Irma,
Levy Am
Publication year - 1986
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.1986.tb00531.x
Subject(s) - index (typography) , inequality , economics , citation , theil index , library science , sociology , econometrics , mathematics , computer science , mathematical analysis , world wide web
In a reply to Cowell's criticism of our note "Decomposing Theil's Index of Income Inequality into Between and Within Components" (Adelman and Levy, 1984), we would like to reemphasize that the purpose of our note was to show that the decomposition of Theil's index of income inequality into between and within components is misleading in the sense that it does not provide the partial contribution of each factor (schooling, ethnicity, and nativity in our example) to total inequality in an unnested manner. Therefore, this decomposition cannot tell us which factor is more dominant in determining the level of income inequality. Regarding our assertion that total inequality varies with the order of decomposition, we are now convinced that we were in error. Using the formula