Decomposing regional income inequality in China and Indonesia using two-stage nested Theil decomposition method

Abstract

The objective of this paper is to present an inequality decomposition method, the two-stage nested Theil decomposition method, which is an extension of the ordinary one-stage Theil decomposition method. The method is analogous to a two-stage nested design in the analysis of variance (ANOVA). It considers the three-level hierarchical structure of a country: region-province-district, and decomposes overall regional inequality, as measured by Theil indices based on district-level mean incomes, into three components: the between-region, between-province, and within-province inequality components. The within-province component is a weighted-average of within-province income inequalities for each province, while the between-province component is a weighted-average of between-province income inequalities within each region. The method uses a district as the underlying regional unit to measure regional income inequality, rather than a province, and thus can analyze the contribution of within-province inequalities as well as between-province and between-region inequalities to the overall regional income inequality in a coherent framework. This paper applies the two-stage nested Theil decomposition method to district-level income and population data in China and Indonesia and explores factors determining regional income inequality in China and Indonesia. Copyright Springer-Verlag Berlin Heidelberg 2003JEL classification: O15, C8,

Inequality convergence in inefficiency and interprovincial income inequality in Indonesia for 1990–2010

“…Interprovincial income inequality decreased from 0.331 in 1990 to 0.220 in 2010. This decreasing trend is consistent with previous studies of Indonesia's regional income inequality, such as Akita and Lukman (1995), Akita and Alisjahbana (2002), Akita (2003), Akita and Miyata (2010), Kataoka (2010), and Akita et al (2011). This observation is also reasonable in light of the Asian financial crisis in 1997/1998 and the global financial crisis in 2007/2008 although neither crisis was found to mark a turning point.…”

“…Several studies examine the factors underlying interregional income inequality, employing various inequality measures and factor decomposition techniques (e.g., Islam and Khan 1986;Akita 1988;Azis 1990;Akita and Lukman 1995;Garcia and Soelistianingsih 1998;Akita et al 1999;Hill 2000;Tadjoeddin et al 2001;Akita and Alisjahbana 2002;Hill 2002;Akita 2003;Milanovic 2005;Akita and Miyata 2008;Hill 2008;Akita and Miyata 2010;Kataoka 2010;Akita, et al 2011;Hayashi et al 2014). One decomposition technique for income inequality is to analyze the factors affecting gross regional domestic product (GRDP) by sectoral income source and hierarchical regional structure (Akita and Lukman 1995;Tadjoeddin et al 2001;Akita and Alisjahbana 2002;Akita 2003;Miyata 2008, 2010;Kataoka 2010;Akita et al 2011). Another method is to analyze the factors associated with expenditure data by household head subgroup, such as province, location, educational attainment, gender, and age (Akita et al 1999;Akita and Miyata 2008;Hayashi et al 2014).…”

Distribuição geográfica do PIB 'per capita'

“…Neste artigo, utilizando a metodologia desenvolvida em Akita (2003), a desigualdade de renda per capita será realizada 2 Desenvolvido em Theil (1967), baseado no conceito de entropia de uma distribuição. Observe-se, com base na expressão (1), onde o subscrito i refere-se ao i-ésimo município, que se seus PIBs per capita forem todos iguais, o T-Theil será zero, enquanto se apenas um tiver PIB per capita diferente de zero, o T-Theil será igual ao logaritmo natural do número de municípios (ln(m)).…”

Desigualdad espacial de ingresos en Chile y su relación con la concentración de capital humano

“…El artículo aporta a la literatura en dos direcciones: primero, analiza una dimensión de la desigualdad poco explorada en Chile, la cual es relevante por sus efectos en la equidad social (Armstrong y Taylor, 2000), eficiencia económica (Davis y Henderson, 2003) y las políticas territoriales (Glaeser y Gottlieb, 2008;Moretti, 2011); en segundo lugar, aporta al análisis del fenómeno mediante una propuesta metodológica que considera la agrupación jerárquica de los individuos en diferentes escalas espaciales (Akita, 2003;Brakman et al, 2001). La metodología propone modelos multinivel para evaluar los efectos del spatial sorting en las variaciones de los ingresos entre unidades espaciales, analizando cómo las características de los individuos (nivel 1) explican el comportamiento de los ingresos de las unidades espaciales donde se localizan (nivel 2).…”