Accounting for income inequality in rural China: a regression-based approach

This paper proposes a framework for inequality decomposition in which inequality of the target variable, e.g., income, can be decomposed into components associated with any number of determinants or proxy variables in a regression equation. The proposed framework is general enough to be applied to any inequality measure and it imposes few restrictions on the specification of the regression model. This generality is illustrated by quantifying root sources of regional income inequality in rural China using a combined Box-Cox and Box-Tidwell income-generating function. (C) 2004 Association for Comparative Economic Studies. Published by Elsevier Inc. All rights reserved.