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Country Inequality Rankings and Conversion Schemes

By Timm Bönke and Carsten Schröder


Two conversion schemes are usually employed for assessing personal-income inequality from household equivalent incomes: to weight household units by size or by needs.Using data from the Luxembourg Income Study, we show the sensitivity of country inequality rankings to conversion schemes and explain the finding by means of inequality decomposition. A bootstrap approach is implemented to test for statistical significance of our results.inequality, equivalence scale, equivalent income, weighting scheme,decomposition

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  1. (2000). Appendix Table A1. Country-specific sample characteristics State Code State Average income
  2. Detailed decomposition results for France and Sweden State 1 adult, childless 1 adults,
  3. (2000). line refers to mean logarithmic deviation; black dashed line to Theil index; grey solid line to half the square of the coefficient of variation Own calculations based on LIS
  4. (2000). Own calculations based on LIS
  5. Size and needs weighted inequality estimates; equivalence-scale elasticity of 0.25 GE(0) GE(1) GE(2)
  6. (2000). Table 2a. Sensitivity of bilateral inequality rankings, equivalence scale elasticity of 0.5
  7. (2000). Table 2b. Sensitivity of bilateral inequality rankings, equivalence scale elasticity of 0.25
  8. (2000). Table A1 in the Appendix for definition of country codes. Own calculations based on LIS
  9. (1998). The sensitivity of income inequality to choice of equivalence scales,

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