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Factor Components of Inequality: A Cross‐Country Study
Author(s) -
GarcíaPeñalosa Cecilia,
Orgiazzi Elsa
Publication year - 2013
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/roiw.12054
Subject(s) - economics , inequality , earnings , income inequality metrics , income distribution , economic inequality , distribution (mathematics) , labour economics , demographic economics , mathematical analysis , mathematics , accounting
This paper uses data from the L uxembourg I ncome Study to examine some of the forces that have driven changes in household income inequality over the last three decades of the twentieth century. We decompose inequality for six countries ( C anada, G ermany, N orway, S weden, the U . K ., and the U . S .) into the three sources of market income (earnings, property income, and income from self‐employment) and taxes and transfers. Our findings indicate that although changes in the distribution of earnings are an important force behind recent trends, they are not the only one. Greater earnings dispersion has in some cases been accompanied by a reduction in the share of earnings which dampened its impact on overall household income inequality. In some countries the contribution of self‐employment income to inequality has been on the rise, while in others, increases in inequality in capital income account for a substantial fraction of the observed distributional changes.