DECOMPOSITION OF GINI-COEFFICIENTS BY INCOME FACTORS - A NEW APPROACHAND APPLICATION

When total income consists of a number of factors, the Gini coefficien t measuring income inequality can be decomposed into factor components . Some traditional decomposition methods rely on calculating the covar iances between incomes and their ranks. Such methods have obvious limi tations in empirical studies. This paper develops a simple decompositi on approach applicable for any type of data with an example to demonst rate how income inequality in rural China in 1992 can be decomposed in to agricultural and non-agricultural components.