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How Much Inequality Can we Explain? A Methodology and an Application to the United States

Frank A. Cowell and Stephen P. Jenkins
The Economic Journal
Vol. 105, No. 429 (Mar., 1995), pp. 421-430
Published by: Wiley on behalf of the Royal Economic Society
DOI: 10.2307/2235501
Stable URL: http://www.jstor.org/stable/2235501
Page Count: 10
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How Much Inequality Can we Explain? A Methodology and an Application to the United States
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Abstract

We develop two simple measures of how much inequality is explained by individual population characteristics or groups of characteristics, analogous to R2 in regression analysis. We investigate the measures' empirical implementation using several alternative theoretically consistent approaches to inequality decomposition. Results are illustrated using US PSID income data.

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