What is the Contribution of Intra-household Inequality to Overall Income Inequality? Evidence from Global Data, 1973-2013
📝 Abstract
Intra-household inequality continues to remain a neglected corner despite renewed focus on income and wealth inequality. Using the LIS micro data, we present evidence that this neglect is equivalent to ignoring up to a third of total inequality. For a wide range of countries and over four decades, we show that at least 30 per cent of total inequality is attributable to inequality within the household. Using a simple normative measure of inequality, we comment on the welfare implications of these trends.
💡 Analysis
Intra-household inequality continues to remain a neglected corner despite renewed focus on income and wealth inequality. Using the LIS micro data, we present evidence that this neglect is equivalent to ignoring up to a third of total inequality. For a wide range of countries and over four decades, we show that at least 30 per cent of total inequality is attributable to inequality within the household. Using a simple normative measure of inequality, we comment on the welfare implications of these trends.
📄 Content
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What is the Contribution of Intra-‐household Inequality to Overall Income Inequality? Evidence from Global Data, 1973-‐2013
Deepak Malghan Indian Institute of Management Bangalore dmalghan@iimb.ernet.in
Hema Swaminathan1 Indian Institute of Management Bangalore hema.swaminathan@iimb.ernet.in
August 2016
Abstract: Intra-‐household inequality continues to remain a neglected corner despite renewed focus on income and wealth inequality. Using the LIS micro data, we present evidence that this neglect is equivalent to ignoring up to a third of total inequality. For a wide range of countries and over four decades, we show that at least 30 per cent of total inequality is attributable to inequality within the household. Using a simple normative measure of inequality, we comment on the welfare implications of these trends.
Keywords: earnings, inequality, intra-‐household; Theil decomposition
1 Acknowledgements: We would like to thank Prachi Yogesh Jain and Akilesh Lakshminarayanan for excellent research assistance, and Suchitra JY for many insightful discussions on this topic. All errors remain our own.
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- Introduction
Intra-‐household inequality remains a neglected area of research in the current inequality discourse. With globalization affecting all corners of the world, global inequality is cause celebre; yet domestic inequality concerns cannot be negated. “Because the world is not united under a single government, however, we cannot dispense with the need to look at individual nation-‐states.” (Milanovic, 2016, pp1). Within national boundaries, many group-‐based inequalities are studied depending on the country context – race, religion, ethnicity, caste are often the relevant lens to sharpen the focus on inequality (Kanbur, 2016). Surprisingly, a study of the household as a social unit where inequalities play out has largely been missing in this literature. A few exceptions to this overall neglect include (Rodriguez, 2016), Malghan & Swaminathan(2015), Lise & Seitz (2011), Sahn & Younger (2009) and Haddad & Kanbur (1990).
The intra-‐household resource allocation literature has contributed tremendously to our understanding of gender inequalities within the household. There is robust empirical evidence that there is heterogeneity within the household in terms of resource allocation between men and women. Generally, women are less likely to earn the same level of income as men, less likely to own key assets and consequently, less likely to be as wealthy as men. There are of course, spatial and temporal variations in the levels and extent of such inequalities reflecting evolving socio-‐cultural norms, structural changes in the economy, and policy interventions. These within-‐household variations can provide insights into the long-‐term trends of inequality; in fact ignoring the household dynamics can lead to a flawed understanding of overall inequality patterns (Chiappori & Meghir, 2014).
A key problem with measuring poverty or inequality is the disconnect between the unit of analysis and the unit of data collection. Typically, one is concerned with the wellbeing of the individual, but the smallest unit for which data is collected is usually
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