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Income Inequality Effects by Income Source: A New Approach and Applications to the United States

Robert I. Lerman and Shlomo Yitzhaki
The Review of Economics and Statistics
Vol. 67, No. 1 (Feb., 1985), pp. 151-156
Published by: The MIT Press
DOI: 10.2307/1928447
Stable URL: http://www.jstor.org/stable/1928447
Page Count: 6
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Income Inequality Effects by Income Source: A New Approach and Applications to the United States
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Abstract

The paper develops a new approach to determining the marginal impact of various income sources on overall income inequality. We show that each source's contribution to the Gini coefficient may be viewed as the product of the source's own Gini, its share of total income, and its correlation with the rank of total income. Applying the approach to the 1980 U.S. distribution of income yields several interesting results, including the finding that spouse's earnings had a larger marginal impact on inequality than did property income.

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