Two Types of Inequality: Inequality Between Persons and Inequality Between Subgroups

Guillermina Jasso and Samuel Kotz Two Types of Inequality: Inequality Between Persons and Inequality Between Subgroups Sociological Methods & Research 2008 37: 31-74.

This article analyzes the mathematical connections between two^{ }kinds of inequality: inequality between persons (e.g., income^{ }inequality) and inequality between subgroups (e.g., racial inequality).^{ }The authors define a general inequality parameter in two-parameter^{ }continuous distributions. This parameter governs all measures^{ }of personal inequality (e.g., the Gini coefficient) and governs^{ }as well the gap (difference or ratio) between the means of subdistributions.^{ }It is thus established that in the distributions analyzed here,^{ }as personal inequality increases, so does inequality between^{ }subgroups. This general inequality parameter also governs Lorenz^{ }dominance and all quantities in the decomposition of Theil’s^{ }mean logarithmic deviation into between-subgroup and within-subgroup^{ }components in the Pareto case. Thus, the general inequalityparameter captures the “deep structure” of inequality. Finally,^{ }a whole-distribution graphical tool is introduced for assessing^{ }personal and subgroup inequality. Substantively, this work suggests^{ }that in societies characterized by special income distributions,^{ }whenever inequality disrupts social cohesion, it attacks on^{ }two fronts, via subgroup inequality as well as personal inequality.

Key Words: continuous univariate distributions • two-parameter distributions • lognormal distribution • Pareto distribution • power-function distribution • Gini coefficient • Atkinson measure • Theil’s MLD • coefficient of variation • Lorenz curve • decomposition of inequality measures • between component • within component

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One Response to Two Types of Inequality: Inequality Between Persons and Inequality Between Subgroups

There is another interesting theory that there is another type of inequality Regional economic inequality. And what is more interesting, it can affects the economy both positively and negatively!
Regional disparity can play two roles: positive and negative. From the one hand, it may become a catalyst for economic growth when the investing capital flows from the wealthy territories to poorer regions reducing business expenses on labor and spreading the market. These processes make a contribution to optimal distribution of economic resources, economically balanced territory development, forming a common market zone in the country. Thus, we deal here with the tight bonds of regions-investors with region-recipients.

From the other hand, there may be situations when regional economic misbalance becomes an impediment for investing capital movements and favors its concentration in wealthy territories of the country. In this case the regions-investors become recipients acting as a magnet for the financial and human resources of the country and regional economic inequality soars through the time. Going further we get the economically and socially depressed lands and the poorer they are the lower chances for resolving the issue. So, if the free market does not succeed in balanced territory development the central government should intervene.

It is described in anarticle named “Regional economic inequality: impact on economic growth and its optimal value in Russia”: http://en.kapital-rus.ru/article/7

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There is another interesting theory that there is another type of inequality Regional economic inequality. And what is more interesting, it can affects the economy both positively and negatively!

Regional disparity can play two roles: positive and negative. From the one hand, it may become a catalyst for economic growth when the investing capital flows from the wealthy territories to poorer regions reducing business expenses on labor and spreading the market. These processes make a contribution to optimal distribution of economic resources, economically balanced territory development, forming a common market zone in the country. Thus, we deal here with the tight bonds of regions-investors with region-recipients.

From the other hand, there may be situations when regional economic misbalance becomes an impediment for investing capital movements and favors its concentration in wealthy territories of the country. In this case the regions-investors become recipients acting as a magnet for the financial and human resources of the country and regional economic inequality soars through the time. Going further we get the economically and socially depressed lands and the poorer they are the lower chances for resolving the issue. So, if the free market does not succeed in balanced territory development the central government should intervene.

It is described in anarticle named “Regional economic inequality: impact on economic growth and its optimal value in Russia”: http://en.kapital-rus.ru/article/7