Inter-Group Income Inequality Among Polish Households. The Theil Approach

Abstract :

The research objective of the article is to examine the extent to which various characteristics of household are related to income inequality and to verify whether the decline in overall inequality is accompanied by the decrease in inter-group inequality. The contribution of our article consists in employing recently available microdata from EU-SILC to the analysis of income inequality for three types of income. In this study, we use the Theil index and its property of being additively decomposable.?The following six factors have been chosen as the possible drivers of income inequality: the type and size of the household, labour market status and educational level of the household head as well as the degree of urbanisation and region of its residence.?Our results indicate that the characteristics related to the labour market are the most influential factors of income inequality in Poland. The characteristics describing the household composition contribute to the overall level of inequality but to a smaller extent. Our study also revealed that the relatively low overall inequality hides more serious income inequality between household groups.