Notes on the Gini index decomposition

The measurement of inequality between performed by resorting to the Gini index decomposition allows to avoid the major difficulties related to the traditional income inequality measures decompositions and, at the same time, allows to correctly evaluate and compare the effects of different factors on total inequality. When a population is divided in two groups, Gini inequality index enables to obtain an immediate and straightforward measure of the contribution to total inequality attributable to the differences between the groups. In particular, inequality between can be measured as the difference of the poor share in the population and the poor share in the variable of interest.