BREAD Working Paper No. 304, June 2011
The Conditional Gini: Estimation and Inference
Christian Ahlin, Hyeok Jeong
The Gini measure of inequality can be written as the ratio of dyadic means. We define the conditional Gini as the ratio of conditional dyadic means. The conditional Gini shows how inequality varies with observables, both levels and differences. We illustrate the approach in a simple analytical example, and discuss how it compares to other techniques for attributing inequality to observables. We show how to estimate the conditional Gini using dyadic regressions, and how to conduct inference using a system dyadic clustering formula. This formula also gives a new way to compute standard errors for estimates of the traditional Gini measure.
Keywords: inequality, Gini, decomposition
JEL classification codes: d31, d63, 015
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