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Kakwani decomposition of redistributive effect

Working Paper 2009-148

Abstract

Kakwani decomposition of redistributive effect into vertical and reranking terms is one of the most widely used tools in measurement of income redistribution. This paper describes how the decomposition has emerged, how its proponents managed to expand and upgrade it, and how extensively it has been employed in empirical research. However, the arguments are presented that the decomposition features certain methodological problems and it is therefore called for its reinterpretation.

Authors: Ivica Urban .

Keywords: income redistribution, Kakwani decomposition, reranking, horizontal inequity, progressivity
JEL: D63, H22, H23.