FACTOR DECOMPOSITION OF CROSS-COUNTRY INCOME INEQUALITY, 1960-1990

In this paper we present Esteban's 1994 [Esteban, J., 1994. La desigua ldad interregional en Europa y en Espana: descripcion y analysis. In: Esteban, J.M-a., Vives, X. (dirs.), Crecimiento y convergencia regiona l en Espana y en Europa, Vol. 2, Institute de Analysis Economico] deco mposition of the Theil index of inequality over per capita incomes int o the (unweighted) sum of the inequality indices of (i) the productivi ty per employed worker, (ii) the employment rate, (iii) the active ove r working-age population rate, and (iv) the working-age over total pop ulation rate. Each of these factors clearly have different meanings fo r analysis as well as for policy. We apply this factoral decomposition to a set of 120 countries. We also contrast the empirical findings wi th the results obtained for the 23 OECD countries. [OECD, Labour Force Statistics, Several issues, Paris]. (C) 1998 Elsevier Science S.A. Al l rights reserved.