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Two Decompositions of Concentration Ratio

Two Decompositions of Concentration Ratio 418 [Part 3, By V. M. RAO University of Bombay INTRODUCTION AND SUMMARY IN explaining the inequality in the distribution of income in a population, it is often necessary to consider it in the context of distribution of income in sub-populations (for example, distribution of rural income and of urban income, etc.) or distribution of main components of total income. The purpose of this note is twofold: firstly, to point out that concentration ratio, which is a commonly used measure of inequality in the distribution of income in a population, is susceptible to simple and meaningful decomposition in these situations relating the concentration ratio in total population to those in sub-populations; secondly, hat concentration ratio pertaining to total income is applicable to those situations 1- rtaining to components of total income. It is shown that concentration ratio in t.. tal population is a weighted average of concentration ratios in sub-populations (with weight equal to the proportion of total population contained in each sub-population) plus a term depending on the inter sub-population differences in relation to per capita income. In the other case, the concentration ratio pertaining to total income is shown to be a weighted average of concentration ratios http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of the Royal Statistical Society Series A (Statistics in Society) Oxford University Press

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Copyright
© 1969 The Authors
ISSN
0964-1998
eISSN
1467-985X
DOI
10.2307/2344120
Publisher site
See Article on Publisher Site

Abstract

418 [Part 3, By V. M. RAO University of Bombay INTRODUCTION AND SUMMARY IN explaining the inequality in the distribution of income in a population, it is often necessary to consider it in the context of distribution of income in sub-populations (for example, distribution of rural income and of urban income, etc.) or distribution of main components of total income. The purpose of this note is twofold: firstly, to point out that concentration ratio, which is a commonly used measure of inequality in the distribution of income in a population, is susceptible to simple and meaningful decomposition in these situations relating the concentration ratio in total population to those in sub-populations; secondly, hat concentration ratio pertaining to total income is applicable to those situations 1- rtaining to components of total income. It is shown that concentration ratio in t.. tal population is a weighted average of concentration ratios in sub-populations (with weight equal to the proportion of total population contained in each sub-population) plus a term depending on the inter sub-population differences in relation to per capita income. In the other case, the concentration ratio pertaining to total income is shown to be a weighted average of concentration ratios

Journal

Journal of the Royal Statistical Society Series A (Statistics in Society)Oxford University Press

Published: Dec 5, 2018

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