Measuring Inequality

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Measuring Inequality

• A practical workshop
• On theory and technique

San Jose, Costa Rica August 4 -5, 2004
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• Panel Session on
• Major Findings
• From
• UTIP

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by James K. Galbraith and Enrique Garcilazo
The University of Texas Inequality Project
http//utip.gov.utexas.edu
Session 4
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Correspondence to known events
Revolution
War
Tiananmen
Banking Crisis
GATT Entry
Falklands War
Military Coup
Data for China drawn partly from State
Statistical Yearbook
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Russia
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This figure shows the evolution of inequality in
Russia measured across regions and across
sectors. Note that the increases across regions
are larger.
Source data are from Goskomstat Calculations by
L. Krytynskaia.
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A stacked bar chart of Theil elements can show
the changing contribution of each sector to
inequality over time values above zero indicate
above-average incomes, and conversely
Industry
Transport
Finance
Agriculture
Education
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1990
Maps provide a useful way to visualize the
increasing regional polarization of income. High
values (yellow to red) indicate concentrations of
relative wealth, low values (light \to dark blue)
show concentrations of relative poverty.
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1994
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1998
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2000
Important Note These measures do not take
account of relative changes in the regional cost
of living.
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These stacked line graphs show the contribution
to inequality in Russia of each sector in each
region. Two facts emerge clearly the general
decline of agriculture, education and health in
all regions, and the rise of industrial
production (energy), construction, transport and
finance in a very few specific regions.
1990
Note that in 2000 the bottom of the income
structure is marked by agriculture finance
meanwhile has moved up past management and
science.
2000
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China
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1987
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2000
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These stacked line graphs show the contribution
to inequality in China of each sector in each
region.Two facts emerge clearly the rise of
monopolized activities such as transport,
utilities and banking, especially in the richer
areas, and the general relative decline of
manufacturing and construction.
1987
2000
Note that the relative position of education and
science has held up much better in China than in
Russia. The decline in agriculture has also not
been as severe.
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Conclusions

• Inequality rose in both Russia and China
• Regional inequalities rose most sharply
• Liberalization favored monopolies and the export
  regions and sectors
• Agriculture lost ground
• In China, the capacity to provide key public
  services withstood the pressures of
  liberalization much better than in Russia

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Regional Inequality in the United States,
1969-2000
Inequality measured between counties
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The NASDAQ in case you dont remember
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Contribution to Inequality between Counties
(Components of the Theil T Statistic)
Relatively Impoverished
Neutral
Prosperous (income above national mean)
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1969
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1970
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1971
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1972
The Soviet wheat deal.
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1973
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1974
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1975
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1976
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1977
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1978
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1979
Energy boom.
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1980
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1981
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1982
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1983
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1984
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1985
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1986
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1987
and bust
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1988
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1989
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1990
Polarization of the West
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1991
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1992
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1993
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1994
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1995
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1996
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1997
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1998
The bubble emerges
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1999
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2000
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Sum of Theil Elements compared with
Counterfactual of no Technology Boom
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