The Econometric SocietyEdited by: Marina Halac • Print ISSN: 0012-9682 • Online ISSN: 1468-0262
Econometrica: Jan, 2026, Volume 94, Issue 1
https://doi.org/10.3982/ECTA22145
p. 169-192
Vesa‐Matti Heikkuri|Matthias Schief
We derive a novel decomposition of the Gini coefficient into within‐ and between‐group inequality terms that sum to the aggregate Gini coefficient. This decomposition is derived from a set of axioms that ensure desirable behavior for the within‐ and between‐group inequality terms. The decomposition of the Gini coefficient is unique given our axioms, easy to compute, and can be interpreted geometrically.
Vesa-Matti Heikkuri and Matthias Schief
In this online appendix, we extend our axiomatic framework and provide additional results. In online appendix A, we show that our axiomatic framework can also be used to uniquely determine the standard decomposition formulas for the generalized entropy and Foster–Shneyerov indices. In online appendix B, we derive asymptotic confidence intervals for the within and between-group inequality terms of the Gini decomposition. In online appendix C, we show how the decomposition formula can be extended to multivariate Gini coefficients. Online appendix D provides an arithmetic interpretation of the Gini decomposition. Online appendix E illustrates the aggregation of subgroup Lorenz regions and the geometric interpretation of the decomposition in the case of continuous distributions. Online appendix F presents additional empirical applications.
Vesa-Matti Heikkuri and Matthias Schief
The replication package for this paper is available at https://doi.org/10.5281/zenodo.17122639. The Journal checked the data and codes included in the package for their ability to reproduce the results in the paper and approved online appendices.
July 5, 2026
