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J Econ (2011) 104:281285
DOI 10.1007/s00712-011-0211-2
BOOK REVIEW
Published online: 29 April 2011 Springer-Verlag 2011
Which public policy instruments are able to combat income or wealth inequalities? How do inheritance taxes or educational systems impact the transmission of wealth and poverty over generations? Which kind of development aid or trade policy is effective in reducing huge income disparities between the rich and the poor in developing countries? Questions such as these captivate the public, policy makers and, of course, social scientists. Answers, rst of all, require an accurate measurement of inequality.
The basic conditions for empirical analyses of inequality and its inter-temporal evolution have never been better than today. A variety of databases containing microlevel information on incomes/earnings/revenues and other socioeconomic characteristics are available for scientic purposes, coming from surveys and administrative records (e.g. income tax or social security data). Many databases are also available in digital form. The Luxembourg Income Study, for example, has compiled an ever-growing international micro-database comprising, amongst others, information on various types of incomes. The data can be explored through user-friendly statistical programs that sometimes even contain ready-to-use software solutions for the computation of inequality indices, (bootstrap) condence intervals, results from inequality decompositions, etc.
Still required from the side of the researcher, however, is a profound knowledge of the data (and its limitations) and, of course, of the principles of inequality measurement. As it is shown in the book under review, Measuring Inequality is a multifaceted problem, both methodological and empirical. Underlying any empirical study of inequality is a number of value judgements, i.e. concerning the choice of the database, of the social unit (e.g., household vs. family vs. individual), of the living-standard indicator (e.g., household income vs. per capita income; gross income vs. disposable income),
C. Schrder (B)
Christian-Albrechts-Universitt Kiel, Kiel, Germany e-mail: [email protected]
Cowell, F.: Measuring Inequality. London School of Economics Perspectives in Economic Analysis
XV, 304 pp. Oxford University Press, Princeton, Oxford, 2011, Hardback 55.00
Carsten Schrder
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282 C. Schrder
and of the inequality scalar measure (e.g., Gini vs. Theil coefcient). These judgements are not innocuous. Switching the income concept, for example, can easily affect an inequality ranking of countries. Measuring Inequality provides concrete assistance by a well informed expert. It is an excellent compact introduction...