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We decompose the Lorenz curve (LC) and its associated concentration curve (CC) by population subgroups. To illustrate these decompositions, we examine changes in earnings inequality among West Germans, East Germans, and foreign guest workers during the recent German unification. We show that East German earnings have become less concentrated in the lower deciles of the overall German earnings distribution, whereas the earnings of West Germans and foreign guest workers have become more concentrated in the lower deciles.

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A simple statistical test is developed for marginal conditional stochastic dominance (MCSD). The MCSD is an extension of second-degree stochastic dominance. As such, without specification ofthe return-generating process, it can rank securities according to marginal changes ofreturn distributions conditionally to the distribution of the market proxy, thereby proving a powerful technique for measuring portfolio performance. Although the MCSD test is asymptotic and conservative, under both the hypotheses of homoskedasticity and heteroskedasticity, it has power to detect the dominance alternative for samples with more than 300 observations. For an illustration, the MCSD test is applied to international equity markets. The test is able to show that nine of twenty-eight equity markets are dominated by the world market.