Distributional Change: Assessing the Contribution of Household Income Sources

Luxembourg Institute of Socio-Economic Research (LISER) Working Paper Series 2019-13

40 Pages Posted: 13 Mar 2020

See all articles by Iryna Kyzyma

Iryna Kyzyma

Luxembourg Institute of Socio-Economic Research (LISER); IZA Institute of Labor Economics

Alessio Fusco

Luxembourg Institute of Socio-Economic Research (LISER)

Philippe Van Kerm

Luxembourg Institute of Socio-Economic Research (LISER)

Date Written: October 1, 2019

Abstract

We develop a decomposition of distributional change by factor components to quantify how changes in the association between sources of income and changes in their marginal distributions contribute to the change in the distribution of household incomes over time. The two components are further broken down to isolate the contribution of specific income sources. 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.

Keywords: Copula, Dependence Structure, Factor Decomposition, Income Sources, Poverty and Inequality

JEL Classification: C14, D31, D33

Suggested Citation

Kyzyma, Iryna and Fusco, Alessio and Van Kerm, Philippe, Distributional Change: Assessing the Contribution of Household Income Sources (October 1, 2019). Luxembourg Institute of Socio-Economic Research (LISER) Working Paper Series 2019-13, Available at SSRN: https://ssrn.com/abstract=3538315 or http://dx.doi.org/10.2139/ssrn.3538315

Iryna Kyzyma (Contact Author)

Luxembourg Institute of Socio-Economic Research (LISER) ( email )

11, Porte des Sciences
Campus Belval – Maison des Sciences Humaines
Esch-sur-Alzette, L-4366
Luxembourg

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Alessio Fusco

Luxembourg Institute of Socio-Economic Research (LISER) ( email )

11, Porte des Sciences
Esch-sur-Alzette, L-4366
Luxembourg

Philippe Van Kerm

Luxembourg Institute of Socio-Economic Research (LISER) ( email )

11, Porte des Sciences
Esch-sur-Alzette, L-4366
Luxembourg

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