Transvariation and inequality between subpopulations in the Dagum's Gini index decomposition

In the framework of inequality measure decompositions, the paper introduces an immediate and straightforward method for the Gini index decomposition, which simplifies the Dagum’s proposal. Simple expressions for the measurement of both overlapping component and inequality between subpopulations are derived, which allow to correctly evaluate and compare the effects of different factors on total inequality. The simplified Dagum’s Gini index decomposition is applied to the Italian household income distribution disaggregated by the educational level and geographical area of residence. The results of the empirical analysis indicate that the inequality between subpopulations represents the main component of the overall inequality.