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We develop a decomposition of changes in household income distributions by factor components to quantify the contribution of changes over time in the association between sources of income and changes in their (marginal) distributions. The two components are broken down to isolate the contribution of specific income sources. An application to the change in the distribution of household incomes in Luxembourg between 2004 and 2013 reveals contrasted results: increased association between spouse earnings, public transfers and taxes depressed the income share of poor households while changes in marginal distributions increased incomes in the upper half of the distribution.
Bibliographical noteFunding Information:
This research has been supported by the Luxembourg Fonds National de la Recherche (PhD grant agreement 2011‐1 (Kyzyma), SimDeco CORE grant C13/SC/5937475 (Van Kerm) and IMeRSe CORE grant C15/SC/10266168 (Fusco)) and by core funding for LISER from the Luxembourg Ministry of Higher Education and Research. We are grateful to the Editor, two Referees, Martin Biewen, Jean‐François Carpantier, Robin Jessen, François Maniquet, Marie Le Mouel, Jamel Trabelsi and Don Williams for feedback and suggestions. Kyzyma thanks the Multidisciplinary Program in Inequality and Social Policy at Harvard University, where part of the work on this paper has been carried out, for its hospitality.
© 2021 Luxembourg Institute of Socio-Economic Research (LISER). Oxford Bulletin of Economics and Statistics published by Oxford University and John Wiley & Sons Ltd.
- Household income
- 2 Finished
SIMDECO: Tax-benefit systems, employment structures and cross-country differences in income inequality in Europe: a micro-simulation approach
16/12/13 → 15/12/16