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The paper revisits the regression-based inequality decomposition based
on Shorrocks and Fields, derives further theoretical results on the factor shares and applies them in an empirical setting. First we derive the
asymptotic distribution of inequality factor share estimators for obtaining
their standard deviations necessary for drawing inference. Then we generalise the approach to derive shares for a frequently used welfare-based
inequality index that does not belong to the same category as those used
in the earlier studies, namely the Atkinson’s Index. Finally we use our
theoretical results to examine the major factors that contribute to income
inequality in India. Our results show that education and household size
are the two most dominant factors contributing to income inequality in
both rural and urban areas, followed by employment status and regional
dierences.

http://www.unige.ch/ses/dsec/research/wps/WPS_12072.pdf

©2012 ALL RIGHTS RESERVED THE AUTHOR(S) AND THE PUBLISHER

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