Econometrica: Jan 1982, Volume 50, Issue 1

Inequality Decomposition by Factor Components

https://doi.org/0012-9682(198201)50:1<193:IDBFC>2.0.CO;2-J
p. 193-212

A. F. 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. In the approach adopted, a number of basic principles of decomposition are proposed and their implications for the assignment of component contributions are examined.

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