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Inequality decomposition values: the trade-off between marginality and efficiency

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Abstract

This paper presents a general procedure for decomposing income inequality measures by income sources. The methods of decomposition proposed are based on the Shapley value and extensions of the Shapley value of transferable utility cooperative games. In particular, we find that Owen’s value can find an interesting application in this context.We show that the axiomatization by the potential of Hart and Mas-Colell remains valid in the presence of the domain restriction of inequality indices. We also examine the properties of these decomposition rules and perform a comparison with Shorrocks’ decomposition rule properties.

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Authors and Affiliations

  1. Université de Caen Basse-Normandie, UFR des Sciences Economiques et de Gestion, Campus 4, 17 rue Claude Bloch, BP 5186, 14032, Caen cedex 5, France

    Frédéric Chantreuil

  2. AMSE, EHESS, Vieille Charité, 2, rue de la Charité, 13002, Marseille, France

    Alain Trannoy

Authors
  1. Frédéric Chantreuil
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  2. Alain Trannoy
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Correspondence to Frédéric Chantreuil.

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Chantreuil, F., Trannoy, A. Inequality decomposition values: the trade-off between marginality and efficiency. J Econ Inequal 11, 83–98 (2013). https://doi.org/10.1007/s10888-011-9207-y

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  • DOI: https://doi.org/10.1007/s10888-011-9207-y

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