Income inequality and efficiency: A decomposition approach and applications to China

Cheng, Yuk Shing; Li, Sung Ko

doi:10.1016/j.econlet.2005.09.011

Cited by 21 publications

(16 citation statements)

References 3 publications

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“…3, inequalities in overall technical inefficiency show a large decline from 0.193 to 0.028 over the period, while its contribution to inequality in labor productivity fell from 49.9% in 1991 to 12.4% in 2009. This declining trend is also observed in China for 1978(Cheng and Li 2006 and in the European Union for 1986-2004(Ezcurra and Iraizoz 2009. Conversely, inequality in pure labor productivity With regard to the inequality change over 1990-2010, the declining inequality in labor productivity is largely affected by the inequality in overall technical inefficiency, which accounted for 86.6% of the former.…”

Section: Identifying the Sources Of Interprovincial Income Inequalitymentioning

confidence: 90%

“…Some studies, such as Ezcurra and Iraizoz (2009) and Li and Zhao (2015), incorporate efficiency factors to the inequality decomposition of economic performance. Ezcurra and Iraizoz (2009) Cheng and Li's (2006) technique to examine regional disparities in efficiency changes over time in European regions; however, they do not explore this empirically in their study.…”

Section: Introductionmentioning

confidence: 99%

“…This is affected by the per capita level of physical and human capital and technological level, and not by inefficiency in resource utilization or allocation (Cheng and Li 2006).…”

Section: Introductionmentioning

confidence: 99%

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Inequality convergence in inefficiency and interprovincial income inequality in Indonesia for 1990–2010

Kataoka

2017

Asia-Pac J Reg Sci

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We use data envelopment analysis to measure the relative efficiency among Indonesia's provinces in using input to produce output over a 20-year period that includes the global economic crisis. We then employ the inequality decomposition technique of a Theil's second measure to explore the extent to which the efficiency factor contributes to interprovincial income inequality. Our efficiency analysis reveals that most Indonesian provinces improved their relative inefficiency considerably in both resource utilization and allocation. Moreover, the relative inefficiency became convergent across provinces for the period. However, several provinces with serious pure technical and scale inefficiencies still exist in 2010. The province of Yogyakarta critically underperformed in resource utilization, and Central Kalimantan and Papua operate at further suboptimum scales. The former needs to develop appropriate mechanisms to efficiently use its given resources, while the latter need to mitigate business-unfriendly regulations and deal with financial constraints. The inequality decomposition analysis shows that interprovincial convergence of inequality in overall technical inefficiency largely contributed to the reduction in income inequality. The convergence of inequality in resource utilization inefficiency had a greater impact on inequality convergence in overall technical inefficiency than in resource allocation inefficiency. In 2010, pure labor productivity became a substantial new factor in determining income inequality. Since this measure is affected by per capita physical and human capital and technology, the spatial allocation imbalance of these factors has become a new concern in Indonesia.

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Section: Identifying the Sources Of Interprovincial Income Inequalitymentioning

confidence: 90%

Section: Introductionmentioning

confidence: 99%

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Inequality convergence in inefficiency and interprovincial income inequality in Indonesia for 1990–2010

Kataoka

2017

Asia-Pac J Reg Sci

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“…The decomposition methodology we employ comes from the literature of per capita income convergence and was proposed by Cheng and Li (2006). The authors show that per capita GDP can be decomposed into the product of labour productivity, employment rate, activity rate and the ratio of working age population to total population.…”

Section: Club Convergence Algorithmmentioning

confidence: 99%

Convergence in per capita health expenditures and health outcomes in the OECD countries

Panopoulou

Pantelidis

2012

Applied Economics

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Our analysis of 19 OECD countries over the period 1972-2006 provides evidence of convergence in per capita health care expenditures for 17 countries, while the US and (to a lesser degree) Norway follow a different path. A simple decomposition of per capita health expenditures reveals that the divergence of the US comes from the divergence of the 'ratio of health care expenditures to GDP' component, while Norway's divergence is mainly caused by the 'labour productivity' component. Interestingly, our results suggest that convergence in per capita health expenditures among the 17 OECD countries does not lead to convergence in health outcomes. Finally, we extend our analysis to examine convergence in various determinants of health expenditures.JEL Classification: C23; I10.

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“…Against this background, and in a quest for empirically well-founded, stylized facts, this note aims to investigate the sources of existing differences in the levels of health-care expenditure across the OECD countries over the period 1975-2003. To that end, we employ a decomposition methodology proposed by Cheng and Li (2006) in the framework of the literature on regional convergence in per capita income. This approach is particularly useful in the context that concerns us, since it allows us to decompose overall inequality in per capita health-care expenditure into the contributions of different factors: health-care expenditure expressed as a proportion of GDP, labour productivity, employment rate, activity rate and the ratio of working-age population to total population.…”

Section: Introductionmentioning

confidence: 99%

Cross‐country disparities in health‐care expenditure: a factor decomposition

Alcalde–Unzu¹,

Ezcurra²,

Pascual³

2008

Health Economics

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This note investigates the sources of international differences in the levels of per capita health-care expenditure, using data on the OECD countries between 1975 and 2003. To that end, we use Theil's second measure of inequality for decomposing cross-country disparities in per capita health-care expenditure into the contributions of various factors: health-care expenditure expressed as a share of GDP, labour productivity, employment rate, activity rate and the ratio of working-age population to total population. Our results show that cross-country differences in the share of GDP devoted to health-care expenditure and labour productivity are the main determinants of the level of dispersion in per capita health-care expenditure. On the contrary, existing disparities in the remaining explanatory factors considered play a less relevant role in this context. In any event, the analysis performed reveals that the overall inequality in per capita health-care expenditure decreased throughout the study period. This was due to the process of international convergence observed in most of the factors used to break down the level of per capita health-care expenditure.

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Income inequality and efficiency: A decomposition approach and applications to China

Cited by 21 publications

References 3 publications

Inequality convergence in inefficiency and interprovincial income inequality in Indonesia for 1990–2010

Inequality convergence in inefficiency and interprovincial income inequality in Indonesia for 1990–2010

Convergence in per capita health expenditures and health outcomes in the OECD countries

Cross‐country disparities in health‐care expenditure: a factor decomposition

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