Inequality by population groups and income sources
Accounting for inequality changes in Spain during the recession
This article is on early view.
The author discusses a new approach which decomposes inequality into the contributions of population groups by income sources.
The author estimates a matrix with rows and columns which indicate different population groups and income sources, respectively, with each element indicating the marginal change in the inequality contribution of a group (as measured by the Recentered Influence Function) when an income source is added and with all contributions adding up to overall inequality.
The approach can be used to analyse the contributions of groups and sources to the trend in inequality over time (or between distributions), disentangling the effect of changes in the composition of the population by groups and changes in their income distribution by sources.
An empirical application characterizes the distributional change in Spain following the Great Recession, highlighting the disequalizing role of the massive increase in unemployment or the equalizing effect of social protection through different population groups.