Beyond Oaxaca-Blinder: Accounting for differences in household income distributions

François Bourguignon, Francisco H.G. Ferreira, Phillippe G. Leite

Research output: Contribution to journalArticle

Abstract

This paper develops a method to decompose differences across distributions of household income, based on counterfactual distributions that 'lie between' the actually observed distributions. Our approach decomposes differences between any two income distributions (or functionals such as inequality or poverty measures) into shares due to price effects; occupational structure effects; and endowment effects. Comparing the household income distributions of the USA and Brazil in 1999, we find that most of Brazil's excess inequality (of 13 Gini points) is accounted for by underlying inequalities in the distributions of education and of non-labor income, notably pensions (between four and six Gini points each). Steeper returns to education in Brazil also make an important contribution (of two to five points). Differences in occupational structure and in racial and demographic composition are much less important.

Original languageEnglish (US)
Pages (from-to)117-148
Number of pages32
JournalJournal of Economic Inequality
Volume6
Issue number2
DOIs
StatePublished - Jun 2008

Keywords

  • Income distribution
  • Inequality decomposition
  • Micro-simulations

ASJC Scopus subject areas

  • Sociology and Political Science
  • Economics, Econometrics and Finance(all)
  • Organizational Behavior and Human Resource Management

Fingerprint Dive into the research topics of 'Beyond Oaxaca-Blinder: Accounting for differences in household income distributions'. Together they form a unique fingerprint.

  • Cite this