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Subgroup and Shapely Value Decompositions of Multidimensional Inequality: An Application to South East European Countries

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Name of the Asset | Subgroup and Shapely Value Decompositions of Multidimensional Inequality: An Application to South East European Countries
Type of Asset | Working Paper
Date | December 2011

Summary

Inequality is multi-dimensional, and the development of appropriate indices is needed to understand it. This paper attempts to construct a multidimensional inequality index with three variables – in addition to the usual one of income – by including health, education and housing quality in the context of three large South-East European countries – Bulgaria, Romania and Serbia – for which comparable Household Budget Surveys were available.

The study applied various decomposition methods to single and multidimensional indices of inequality. It also applied standard decomposition techniques on the mean logarithmic deviation of all four single dimensions and on the multidimensional index.

Results indicate that in all three countries, education turns out to be the most important determinant of the composite inequality measure with employment status ranking second in Bulgaria and Romania and third in Serbia. They also show that a regression based Shapely value approach might be a useful alternative in doing comparisons across countries and over time.

Authors:

  • Sebastian Leitner, The Vienna Institute for International Economic Studies (wiiw)
  • Robert Stehrer, The Vienna Institute for International Economic Studies (wiiw)

Country and/or Region | South East Europe
Name of the Program | Regional Research Competition
Funder(s) | Jubiläumsfonds of the Austrian National Bank (OeNB) and the Austrian Ministry of Finance

 

Download the Full Study here

 

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